PMI/MIP Tax Deduction Passed As Part Of The American Taxpayer Relief Act

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Mortgage and Lending with George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut NMLS #65149

PMI/MIP Tax Deduction Passed As Part Of The American Taxpayer Relief Act.  Much has been written about the Fiscal Cliff, and the impact that it would of had on homeowner if provision that impacted homeowners were not extended, such as:

However, one provision that has not gotten much attention, is one that is a part of the American Taxpayer Relief Act.  If the American Taxpayer Relief Act had not been extended, a huge number of lower to mid income homeowners would have been impacted, and lost a very valuable tax deduction.

Included in the American Taxpayer Relief Act, is a provision which allows homeowners who are paying Private Mortgage Insurance (PMI) or a FHA Monthly Insurance Premium (MIP) as part of their Monthly Mortgage Payment on their Primary Residence, and/or a Non-Rental Second Home to deduct the PMI/MIP from their Income Tax.  The amount of the deduction is connected to individual and/or marital income.

As you can see from the chart above the deduction is reduce by 10% for each $1,000 of the the homeowners Adjusted Gross Income (AGI) exceeds $100,000.  Therefore, the tax deductions is not available once the AGI exceeds $110,000.

Married individuals filing separate returns who have an AGI of $50,000 or less will be able to deduct 50% of their PMI/MIP premiums.  In their case the deduction is reduced by 5% for each additional $500 of AGI, and phased out after $54,500 of AGI

With the extension earlier this week of the American Taxpayer Relief Act, this tax deduction will continue to be available to lower to mid income homeowners throw 2013.  I would advise homeowners who are presently paying PMI/MIP as part of their Monthly Mortgage Payment to contact their Accountant, and find out how they will benefit tax wise as a result of the extension of the PMI/MIP Tax Deduction Passed As Part Of The American Taxpayer Relief Act.

 

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 Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Michael J. Perry 01/06/2013 05:50 AM
  2. Michael Dagner 02/07/2013 09:45 PM
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Rainmaker
987,645
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Someone will have to explain to me, that based on this revision how this is not a tax increase. The President campaigned on no tax increase to families making over $250,000. This will ne one of many tax increases to middle American.

Jan 06, 2013 02:52 AM #1
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Andrea Swiedler
Berkshire Hathaway HomeServices New England Properties - New Milford, CT
Realtor, Southern Litchfield County CT

George, this is great information! I know it is something many were not thinking about.

Jan 06, 2013 03:06 AM #2
Rainmaker
232,075
Barbara Jenness
Barbara B. Jenness, P.A. - St. Augustine, FL - Saint Augustine, FL
St. Augustine FL Real Estate

Thank you, George, for sharing this information. Definitely something we all need to know about as more and more loans are FHA.

Jan 06, 2013 03:58 AM #3
Rainmaker
1,962,225
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thanks for sharing. I will bookmark this and read it again and share with others.

Jan 06, 2013 04:23 AM #4
Rainmaker
313,177
Frank Laisch
Stewart Title Company - Tampa, FL
"The Insurance Guy"

George, Great Information on PMI, I know this will help the homeowners making less that 100K

Jan 06, 2013 04:35 AM #5
Rainmaker
1,018,909
Michael J. Perry
RE/MAX Associates of Lancaster, PA. - Lancaster, PA
Lancaster Relo Specialist

George thanks for the phase out chart ! I'm going to reblog this !  Is this still a TEMPORARY part of the tax code(that will expire again) ?

Jan 06, 2013 05:45 AM #6
Rainmaker
894,712
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

George, good information! I don't think a lot of homeowners who are paying PMI/MIP are aware of this.

Jan 06, 2013 06:27 AM #7
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut - Middletown, CT
Your Connecticut Mortgage Expert

Joe, I would have to go back and see what deduction was before the extension but I think it remained the same.

Andrea, I was one of those people, and I did not notice it until Friday.

Barbara it will have an impact on both Conventional and FHA Mortgages, but the impact will be more apparent on the FHA Mortgages because of the MIP being a higher multiplier than the PMI.

Gita thank you.

Frank like I commented to Barbara the impact will be felt on both Conventional and FHA Mortgages, but the impact will be more apparent on the FHA Mortgages because of the MIP being a higher multiplier than the PMI.

Michael, yes it was only extended throw this year, so as it stands right now homeowners will be able to take advantage of the tax deduction 2012 & 2013 and then it will need to be extended again.

Michael I think you are right, it does tend to get overlooked.

Jan 06, 2013 06:41 AM #8
Rainmaker
262,483
Rob Spinosa
RPM Mortgage, Marin County, CA - Mill Valley, CA
Marin Mortgage Broker

I wish this got more press, so thank you George.  I just had a prospect excoriate me the other day for suggesting PMI.  He said his CPA told him to NEVER consider it.  Turns out, he makes less than $100K....

Jan 06, 2013 07:55 AM #9
Rainer
191,472
Dwight Puntigan
Pyramid Realty Group - Saint Charles, MO
Dwight Puntigan

Have a feeling that this is like so many legislative acts where many things will continue to pop up as the give aways increase and more revenue is needed.

Jan 06, 2013 08:55 AM #10
Rainmaker
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Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

George, great information for our homeowners, as I have not seen (or heard) the entire agreement and how it will affect everyone.

Jan 06, 2013 10:23 AM #11
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut - Middletown, CT
Your Connecticut Mortgage Expert

Rob, it was one of those things that fell through the cracks, and I missed it until Friday, but glad that I was able to get the information out before homeowners start doing their taxes.

Dwight this is not a new tax deduction, just like the mortgage interest deduction is not new.  They have both been around for many years, and through several administrations.

Joan I have not seen the entire agreement either so their maybe some things that we do not know about yet.

 

Jan 06, 2013 06:43 PM #12
Anonymous
Anonymous
Anonymous

This is VERY good news for most people since they will see a number of their other deductions go away.  thank you for the info.

Jan 07, 2013 03:30 PM #13
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George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages Connecticut - Middletown, CT
Your Connecticut Mortgage Expert

Stuart, so far the Real Estate Tax Deductions have been extended, but there are other things that could affect the Real Estate Market that might not fair so well.

Jan 07, 2013 07:40 PM #14
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Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 800-610-7253 DRE01267479 - Costa M

George - This is great news for those who are paying PMI, which tend to be those who had less money available for down payment.

Jan 07, 2013 10:37 PM #15
Rainmaker
424,354
Frances C. Rokicki
Fran Rokicki Realty, LLC - Bolton, CT
Broker-Mentor,CRS

George, You always share the good information that my clients are looking for.  Well, and me, too!  This is good news for many of those first time buyers!  Thank you!

Jan 08, 2013 04:18 PM #16
Rainmaker
243,602
Michael Dagner
Brokers Guild Classic - Denver, CO
Your Denver Homes Realty Expert

George,

Great information for anyone looking to maximize deductions, especially now that we're into tax season.  Thanks for putting this post together.

Feb 07, 2013 09:43 PM #17
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