There’s a new tax break aimed at new home loans

Federal Reserve Chairman Ben Bernanke endorsed a “quickly” implemented fiscal stimulus package, saying it would complement the Fed’s efforts to provide monetary-policy insurance against an economic downturn.

Homeowners with a new mortgage that is covered by insurance can claim a tax break on the insurance for the first time this year.

The new break, called the qualified mortgage insurance deduction, lets taxpayers with an adjusted gross income of less than $100,000 write off the full cost of mortgage insurance. Folks who earn less than $109,000 can take a write-off for part of it.

To qualify, the mortgage must have originated between 2007 and 2010. The deduction can be taken for insurance on a principal residence or a second home.

Introduced by the Tax Relief and Health Care Act of 2006, the break initially applied only to the 2007 tax year, but it was extended through 2010 by the Mortgage Forgiveness Debt Relief Act of 2007.

“It’s something we will definitely ask our clients about,” said Jackie Perlman, senior tax research coordinator at H&R Block Inc. “If you come in and say you bought a home, we’ll be checking it out and making sure you get that deduction.”

The mortgage-insurance deduction will help first-time home buyers who are unable to put down 20%. Typically, “if you put down less than 20% down, that’s where the lender would require private mortgage insurance,” said Katie Monfre, a spokeswoman for Mortgage Guaranty Insurance Corp., a private mortgage insurer in Milwaukee owned by MGIC Investment Corp.

On average, the annual tax break from the deduction will be worth around $350 per taxpayer, according to the Mortgage Insurance Companies of America, which represents mortgage insurers.

Bob Meighan, CPA and vice president at Intuit Inc., which makes TurboTax software, said he doesn’t have an estimate of how many clients will take the deduction, but that claiming it is likely to be “pretty straightforward.”

Private mortgage insurance protects the lender, guarding against a situation in which a borrower defaults, leaving the lender unable to recover costs after foreclosing on the loan.

About one in 10 residential mortgages are covered by private mortgage insurance, according to Jeff Lubar, a spokesman for MICA. That number rises if one includes government loans covered by mortgage insurance.

Info Source: Wall Street Journal



  1. Garrett said

    it sounds good, but does anybody in sF even pay PMI?

  2. The diffuse blue glow around the centre of the galaxy comes from hot, bright gas. The bright point sources are mostly binary stars interacting with one another. In some situations, a white dwarf is gathering material from a companion star. When too much gas piles up, an explosion occurs on the surface of the white dwarf, which astronomers see as a flash of X- rays called a nova.

  3. ingipuff said


RSS feed for comments on this post · TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: