Your Mortgage Insurance May Be Tax Deductible!

Posted by PollyAnna Snyder on Wednesday, March 11th, 2020 at 2:23pm

From a recent email from Flagstar...

Great news! If your buyers are currently paying mortgage insurance premiums, those payments may be deductible on their taxes, thanks to an extension from the Further Consolidated Appropriations Act, 2020.  
Since we're not tax advisors, you can get the full breakdown on how mortgage insurance deduction works at this link from the IRS.  
However, I'd urge you to check it out while it's fresh in your mind, as there may be a deadline for how long your clients will be able to deduct their mortgage insurance premiums.  
As of right now, however, your clients that qualify can still save a bundle on their tax bill for mortgage insurance premiums paid for the 2019 tax year. The same goes for retroactively for the 2018 tax year (if it makes sense to do so), and potentially all the way through this year to December 31, 2020.  
What are the basic guidelines for the mortgage interest tax deduction?  
In order to claim the deduction at all, clients will need to itemize their deductions instead of taking the standard deduction when doing their taxes.  
That said, in most cases, clients can deduct 100% of their home's mortgage insurance premiums. However, it depends on when their mortgage originated, the loan amount, and how mortgage proceeds are used.   
For example, borrowers who bought their home after December 15th, 2017 can deduct interest accumulated from the first $750,000 of their mortgage.  
Once again, though, it's best to check out the full breakdown from the IRS, as we are not tax advisors.  
The bottom line, of course, is that any deductions your clients can qualify for are a handy way to reduce what's owed to Uncle Sam. By keeping solid records and itemizing taxes (on Schedule A or IRS Form 1040), qualifying for this mortgage insurance premium deduction is a great way for clients to save money through what they've paid into their home. 

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