Tax Help - Deductible PMI Premiums

What is PMI?

Private Mortage Insurance (PMI) is usually required when an individual buys a house with less than a 20% down payment.

PMI protects the lender against the costs of foreclosure. This insurance protection is provided by private mortage-insurance companies. Lenders ar able to accept lower down payments from the homebuyer by requiring PMI.

PMI provides what the equity of a higher down payment would pdrovided to cover a lender's losses in the event of foreclosure. Without PMI, a buyer might not be able to buy a home without a 20% down payment.

PMI Deduction for 2007

In 2007, PMI is deductible as an itemized deduction on Schedule A.

• PMI must meet the following requirements to be deductible:


• Premiums must be paid on new or refinanced mortgages issued after 2006;


• Premiums must be paid and incurred in 2007;


• Premiums must be paid on acquisition indebtedness.

Deductible PMI premiums will be phased out for AGI over $100,000 ($50,000 for MFS). Qualified PMI premiums will be deducted the same as mortgage interest.

If you paid PMI on your mortgage in 2007 and failed to take this deduction, you can always amended your return....that is your right!

Additional resources for understanding PMI:

Private MI: Today's Smart Choice

Publication 785

Frequently Asked Questions: PMI