Mortgage Insurance Tax Deductible for 2014
Mortgage Insurance Tax Deductible for 2014 for all homeowners who make less than $109,000 effective with the passage of the Tax Increase Prevention Act of 2014 on December 16, 2014, by the U.S. Senate. The House of Representatives passed the bill on December 3, 2014.
The passage of this bill means homeowners can claim the MI Tax Deduction retroactive to January 1, 2014, allowing eligible borrowers with adjusted gross income of less than $109,000 to deduct the eligible amount of their 2014 mortgage insurance premiums when they file their 2014 Federal Tax Returns. We recommend that you consult a tax adviser to determine if you are eligible to claim the mortgage insurance deduction.
Mortgage Insurance has been tax deductible since the Mortgage Debt Relief Act of 2007 which made MI deductible until 2012. An extension was past to make MI tax deductible in 2013 and MI was not going to be deductible in 2014 until the last minute passing of the Tax Increase Prevention Act.
Frequently Asked Questions about MI Tax Deductibility for 2014:
Q – What is mortgage insurance tax deductibility?
A – Mortgage insurance tax deductibility is the federal legislation that makes mortgage insurance (MI) premiums tax deductible for eligible homeowners.
Q – How Long will the Mortgage Insurance Tax Deduction be available for homeowners?
A – The MI Tax Deduction Bill makes MI premiums tax deductible for eligible taxpayers through December 31, 2014. Which means you will file the deduction on your 2014 Federal Income Tax Return which must be filed by April 15, 2015, or file an extension to file by October 15, 2015.
Q – How Can MI tax deduction help homeowners?
A – By deductible MI premiums on tax returns, the cost of homeownership is reduced for borrowers with mortgage insurance which makes an insured mortgage even more affordable.
Q – How much can a homeowner save by taking the MI Tax Deduction on their 2014 Federal Tax Return?
A – We estimate that eligible homeowners will save an extra $200 – $400 annually.
Q – Can you deduct Single Premium Mortgage Insurance under this new law?
A – Yes, Single Premium Mortgage Insurance premiums are eligible for deduction under the new law. A portion of the upfront premium will be deductible in the first year, and some portion of the premium can be deducted in subsequent years through 2014. Borrowers should seek advice from a tax professional.
Q – Who is responsible for delivering to the borrower a statement of the amount of MI Premium that they paid during the year?
A – In most cases, the mortgage servicer (Company you pay each month) will be responsible for reporting the total MI Premium paid by the borrower in 2014. Very similar to how the mortgage servicer reports your interest and property taxes paid each year for tax purposes.
Q – What does the extended legislation cover?
A – Borrowers whose annual adjusted gross income is $100,000 or less can deduct their mortgage insurance premiums from their 2007 – 2014 Federal Income tax returns for homes purchased or refinanced during this timeframe. Those borrowers with incomes between $100,000 and $109,000 are eligible for a reduced tax break under the new law.
Q – Is Adjust Gross Income (AGI) calculated before or after MI deduction?
A – Adjusted Gross Income is income before deductions
If you have questions about eliminating your mortgage insurance by refinancing your current mortgage into a loan with no MI or a lower interest rate or term, please call us at 302-703-0727 or you can APPLY ONLINE.
John R. Thomas – NMLS 38783
Certified Mortgage Planner – Primary Residential Mortgage, Inc.
302-703-0727 DE Office / 610-906-3109 PA Office / 410-412-3319 MD Office
248 E Chestnut Hill Rd, Newark, DE 19713