Some Crofton Homeowners Have a New Tax Deduction

January 27th, 2008 Categories: Crofton News

Crofton homeowners may be eligible for a new federal tax deduction of about $300 that we haven’t enjoyed in the past.

This information comes from The Mortgage Insurance Companies of America (MICA), a trade association representing the private mortgage insurance industry. MICA provides information to lenders and investors on legislative and regulatory issues and represents them on Capitol Hill.

According to the MICA website, many homeowners with private mortgage insurance on their home loans may be able to deduct the cost of mortgage insurance premiums for the very first time on their 2007 federal tax returns.

Who qualifies for this deduction?

Families with an adjusted gross income of $100,000 or less qualify for the full tax deduction, while families with incomes of more than $100,000 and up to $109,000 will be eligible for a reduced deduction.

Which homes qualify?

If mortgage insurance is required for the loan on your Crofton home and it closes between January 1, 2007 and December 31, 2010, your PMI could be deductible in those tax years. Unfortunately, private mortgage insurance on loans that closed prior to 2007 is not deductible.

A few more details:

* The property must be owner-occupied.
* You don’t have to be a first-time buyer to qualify.
* The deduction applies to your home and one vacation home.
* Refinanced loans are eligible up to the amount re-financed.
* Anyone may claim this deduction, military or civilian.

Of course, it is not my intention to provide Crofton residents with financial, tax or legal advice. But I wanted to make you’re aware of this new tax deduction so you can ask your own tax advisor about it, and not overlook it.

If you currently have an adjustable rate mortgage and you’re “on the fence” about if/when to refinance, perhaps this tax savings will defray the cost enough to make refinancing your home (or vacation home) more attractive. I can’t imagine a better time than now, while fixed rate mortgages are still available at rates hovering around 6%.

P.S. Crofton homeowners who still pay private mortgage insurance, should check out this Step-by-Step Guide to mortgage insurance cancellation if equity now exceeds 20%.

Mortgage Interest Rates Updated Daily

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