Quick Tip: Some Homeowners Can Deduct Private Mortgage Insurance
When you own a home and itemize deductions on IRS Schedule A, you get several money-saving tax breaks. They include deductions for mortgage interest, mortgage points, property taxes, and in some cases private mortgage insurance (PMI).
PMI is a product you have to pay for it when your mortgage balance exceeds 80% of your home's value. It doesn't insure you--it protects your lender in case you default on the loan. But the bright side is that you can deduct PMI payments on loans (and refinances up to the original loan amount) that you take out from 2007 through the end of 2011--if you don't make too much money. The PMI deduction is reduced or phased out when your adjusted gross income exceeds $100,000 (or $50,000 if you're married and filing separate returns). Schedule A instructions include a worksheet you can use to determine the amount of PMI you're eligible to deduct.
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