2007 Mortgage Insurance May Become Tax Deductible

Mortgage Insurance Tax Deduction (National Association of Texas Mortgage Bankers) -

Finally Congress does something this year to help property owners. Starting in 2007, the mortgage insurance that one pays on their mortgage loan will be a line item tax deduction. Clarification regarding the new law is below.

The 109th Congress closed its session late last week by passing a tax reform bill, which included a new provision that will provide a significant benefit to your consumers in 2007. H.R. 6111 introduces a new, one-year, itemized tax deduction for mortgage insurance premiums. This new legislation will allow taxpayers who itemize their deductions to take an additional deduction for mortgage insurance premiums paid after December 31, 2006.

Section 163(h)(3) of the Internal Revenue Code allows taxpayers to take a deduction for interest paid on acquisition or home equity indebtedness on the taxpayer’s qualified residence. H.R. 6111 amends Section 163(h)(3) to include language that allows taxpayers to treat mortgage insurance premiums as interest during the 2007 tax year. This treatment only applies to mortgage insurance contracts issued between January 1, 2007 and December 31, 2007, and is only available to taxpayers with an adjusted gross income of less than $110,000.

H.R. 6111 passed the House 367-45 and the Senate 79-9, and now awaits the President’s signature. The text of this bill is currently not available. Once the full text is released, NAMB will feature it in a future edition of News from NAMB.

If you have any questions, please contact: GovernmentAffairs@namb.org.