Private mortgage insurance (PMI) and mor𝄹tgage insurance premiums (MIP) are often required for homebuyers who put down less than 20% on their homes. Th༺ese insurance premiums were not deductible from federal taxes for years but the legislation surrounding this has evolved.

The Further Consolidated Appropriations Act of 2020 allowed MIP and PMI tax deductions for tax years 2018 through 2021 if qualified taxpayers filed amended federal tax returns. Filers were able to use the deduction on line 8d of Schedule A (Form 1040) for amounts paid or accrued. The deduction expired at the end of 2021, however, so this insurance isn't tax deducti🎃ble for tax year 2022 and beyond.

PMI Tax Deduction: Legislation Timeline

The Tax Relief and Health Care Act of 2006 introduced the deduction for mortgage insurance premiums. Congress has made several moves to extend or reinstate this deduction since then.

• 2015: The Protecti൩ng Americans from Tax Hikes (PATH) Act extended the deduction for one year covering tax year 2015.
• 2017: The Bipartisan Budget Act of 2018 retroactively extended the deduction for 2017.
  
• 2019: California Representative Julia Brownley introduced the Mortgage Insurance Tax Deduction Act of 2019 which would make the mortgage insurance deduction a permanent part of the tax code and would apply retroactively to all amounts paid or accrued since Dec. 31, 2017.
• 2020-2021: The Further Consolidated Appropriations Act of 2020 allowed PMI tax deductions for 2020 and 2021 and retroactively for 2018 and 2019 if taxpayers filed amended returns.

The future of this deduction unfortunately remains uncertain but a coalition of business and advocacy groups joined forces in 2024 to urge lawmakers to reinstate the deduction. Their efforts are pending.

✨How Much Could the PMI Deduction Save a Taxpayer?

The savings from the PMI deduction depended on your tax bracket and how much you paid ♉in premiums. Homeowners paid around $50 per month in PMI premiums on average for every $100,000 of financing at the time when this deduction was available. You could have saved between $180 and $330 if you paid $1,500 in PMI premiums for the 🐷year depending on your tax bracket.

The amount of the down payment, the type of loan, and lender ꦺrequirements could all affect your actual co﷽st, however.

Let's say you bought a $200,000 home, put down 5%, and paid $1,500 in PMI premiums over a year. If your adjusted gross income (AGI) was $100,000:

• You would save $180 ($1,500 x 12%) if you were in the 12% tax bracket.
• You would save $330 ($1,500 x 22%) if you were in the 22% tax bracket.

The deduction would reduce your taxable income by $1,500.

Origins of the Mortgage Insurance Tax Deduction

This tax deduction first appeared as part of the Tax Relief and Health Care Act of 2006. It was initially available for mortgages that originated in 2007 and beyond.

The Protecting Americans from the Tax Hikes Act of 2015 extended the deduction to 2016 in response to the slow recovery in the housing market.

The itemized deduction for mortgage insurance premiums expired as of 2021.

The Bottom Line

The PMI deduction isn't available for tax year 2024 but efforts are being made in 2025 to convince lawmakers to reinstate it. You may still be able to deduct PMI if you qualify for past years. The best strategy for eliminating PMI is to pay down your mortgage and request PMI cancellation when you've reached 20% 澳洲幸运5官方开奖结果体彩网:equity in your home.