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Is the premium you pay for PMI on a rental property tax deductible?

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Is the premium you pay for PMI on a rental property tax deductible?

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  1. The tax deduction is available to a personal residence and a non-rental second home.

    The homeowner’s loan that include the  tax deductible PMI must have originated after January 1st of 2007. It can be for a purchase or refinance, but the loan amount may not exceed the acquisition loan amounts.

    In other words, if you bought a house for $100,000 and had a 1st mortgage for $80,000 and a 2nd mortgage for $10,000, you could refinance into a new loan with PMI for $90,000. If, you could somehow get a loan for $95,000, you would be able to deduct the PMI for the loan amount up to $90,000 only.

    The legislation also carries with it the caveat that your family may earn no more than $100,000 per year or the mortgage insurance will not be 100% tax deductible.  For each $1,000 of annual household income earned in a year, the deduction is reduced by 10%. Once a family’s income is over $109,000, the PMI deduction will not apply.

    The household income is determined by the adjusted gross income prior to any itemized deductions. This legislation is aimed at helping first time homebuyers with the purchase of a new home.


  2. Posted on Bankrate.com:

    While claiming the new PMI deduction is easy, there are some limits.

    First, there's the deduction time frame. It's restricted to a few years. This tax-filing season, you can claim a deduction for PMI premiums only if you took out the mortgage on which you pay PMI on or after Jan. 1, 2007. If your home loan was issued before that date, none of your 2007 PMI payments are deductible.

    And if you get a new mortgage in 2008 through 2010, any associated PMI premiums on that loan will be deductible in those tax years.

    Now, about that second-home loan on which you pay PMI premiums. In order to be deductible, the second property must be for your personal use as a second or vacation residence. If you rent it out, then you're stuck paying the PMI without any help from the IRS.

  3. It's not supposed to be .  Lots of people cheat and deduct it anyway.  I don't recommend doing that.   Some mortgage companies started doing "stretch" loans where you paid a higher interest rate and no PMI so it was all deductible.

    Are you having good luck with your rental?  Are you a good landlord?  I was a good landlord and it worked out fine.

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