Mortgage Insurance Tax Deduction Reinstated and Extended Through 2013

One of the lesser known negotiations that happened with the “Fiscal Cliff” included a reinstatement and extension of the expired ability of homeowners to treat mortgage insurance as a tax deduction, which expired on January 1st 2012.  This is simply a HUGE WIN for homeowners as well as for those will become homeowners in 2013.

Originally the mortgage insurance premium deduction was enacted in 2006, and it allowed for homebuyers and homeowners who were refinancing their homes to write off their premiums.  However this legislation was not renewed in early 2012 due to the “debt ceiling negotiations” going on at the time.

Borrowers who are single or married and filing jointly with adjusted gross incomes of $100,000 or less can write off 100% of their annual mortgage insurance premiums.  Married households filing singly can write off 50% of premiums.  Borrowers with incomes above $100,000 may qualify for partial deductions on a sliding scale.

However, it appears to get even better.  It looks as if the mortgage insurance tax deduction has been retroactively reinstated to apply to any mortgage insurance paid after December 31st, 2011!

Please CLICK HERE to review Section 204 (specifically page 25 of this PDF) in its entirety:


(a) IN GENERAL.—Subclause (I) of section 163(h)(3)(E)(iv) is amended by striking ‘‘December 31, 2011’’ and inserting ‘‘December 31, 2013’’.

(b) TECHNICAL AMENDMENTS.—Clause (i) of section 163(h)(4)(E) is amended—

(1) by striking ‘‘Veterans Administration’’ and inserting ‘‘Department of Veterans Affairs’’, and
(2) by striking ‘‘Rural Housing Administration’’ and inserting ‘‘Rural Housing Service’’.
EFFECTIVE DATE.—The amendments made by this section shall apply to amounts paid or accrued after December 31, 2011.

This is great news for those homeowners who purchased or refinanced homes in 2012 to take advantage of a healthy write off when filing their upcoming 2012 returns, and help put some money back in the pockets of middle class homeowners over the next 2 tax years at the very least***

Interest rates have trickled up a bit over the last 30 days, however they continue to stay put at historic lows and now coupled with this great news about the ability to write off mortgage insurance continues to make the prospects of purchasing a new home or refinancing one’s mortgage quite attractive.

Please give us a call at (720) 295-8214 for a no cost, no obligation Total Cost Analysis for refinancing or a no cost, no obligation Rent vs. Own Analysis.

***Disclaimer:  We are not licensed tax professionals.  For more information about how to claim this tax deduction, please consult a CPA or other Tax Professional.  If you would like a recommendation for a CPA or other Tax Professional, please let us know and we be happy to provide one***


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