Here’s what HIVE AI had to say about “Is mortgage insurance premium (PMI) deductible this year?”:
No, mortgage insurance premiums (PMI) are not deductible on your 2024 tax return. The deduction for mortgage insurance premiums expired at the end of 2021 and has not been renewed for subsequent tax years.
History of the PMI Deduction
The deduction for mortgage insurance premiums was originally introduced as a temporary tax benefit. According to IRS Publication 530, “The itemized deduction for mortgage premiums has expired. The deduction doesn’t exist for premiums paid after December 31, 2021.” This clearly indicates that the deduction is no longer available for current tax years. IRS – Publication 530: Tax Information for Homeowners
The IRS has confirmed this expiration in multiple sources. The VITA/TCE Training Supplement explicitly states that “Private mortgage insurance premiums are not deductible for 2024 at the time this publication was printed.” IRS – Publication 4491-X: VITA/TCE Training Supplement
Previous Availability of the Deduction
When the deduction was available, it allowed taxpayers to deduct mortgage insurance premiums paid in connection with acquisition debt for a qualified residence, treating these premiums as qualified residence interest under Section 163 of the Internal Revenue Code.
The IRS Internal Revenue Manual (IRM) explains that qualified mortgage insurance premiums were previously deductible if they were:
- Paid under a mortgage insurance contract issued after December 31, 2006
- In connection with home acquisition debt secured by a qualified residence
- Paid or accrued on or before December 31, 2021
Additionally, there were income limitations – no deduction was allowed if AGI exceeded $109,000 ($54,500 if married filing separately), and the deduction was limited if AGI exceeded $100,000 ($50,000 if married filing separately). IRS IRM 21.6.4 Tax Computation / Accounting Period Changes
Types of Mortgage Insurance That Were Deductible
When the deduction was available, qualified mortgage insurance included:
- Mortgage insurance provided by the Department of Veterans Affairs
- Mortgage insurance provided by the Federal Housing Administration
- Mortgage insurance provided by the Rural Housing Service
- Private mortgage insurance (as defined by section 2 of the Homeowners Protection Act of 1998) IRC § 163(h)
How the Deduction Previously Worked
For tax years when the deduction was available, taxpayers could claim mortgage insurance premiums on Schedule A as itemized deductions. For example, in a 2016 Tax Court case, a taxpayer claimed a deduction of $2,847 for a mortgage insurance premium. The IRS had received Form 1098, Mortgage Interest Statement, reporting that the taxpayer had paid a mortgage insurance premium of $2,846 (the $1 difference was attributed to a rounding error). The Tax Court allowed this deduction because the mortgage insurance premium was associated with the home that was the taxpayer’s principal residence during that year. Dawson U.S. Tax Court Opinions: Nnabugwu C. Eze
Special Prepayment Rules That Applied
When the deduction was available, there were special rules for prepaid qualified mortgage insurance. Any amount paid for qualified mortgage insurance that was properly allocable to periods after the close of the tax year had to be charged to a capital account and treated as paid in the periods to which it was allocated. If the mortgage was satisfied before the end of its term, no deduction was allowed for the unamortized balance. However, these rules did not apply to amounts paid for qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service. IRC § 163(h)
Legislative Extensions in the Past
The deduction for mortgage insurance premiums was extended several times before ultimately expiring. For example, Section 3 of the Mortgage Forgiveness Debt Relief Act of 2007 (Public Law 110-142) extended the deductibility of qualified mortgage insurance premiums through 2010. Notice 2008-15 Subsequent legislation extended it further, with the final extension covering premiums paid through December 31, 2021.
What This Means for Your 2024 Taxes
Since the deduction for mortgage insurance premiums has expired, you cannot include these payments as itemized deductions on your 2024 tax return. If you receive a Form 1098 Mortgage Interest Statement that shows mortgage insurance premiums in Box 5, you should not include this amount in your itemized deductions.
Possible Future Reinstatement
It’s worth noting that Congress has a history of retroactively extending expired tax provisions, sometimes even after taxpayers have filed returns for the affected tax years. However, as of now, there has been no legislation enacted to extend the mortgage insurance premium deduction beyond 2021.
Conclusion
For the 2024 tax year, mortgage insurance premiums are not tax-deductible. If you’re looking to maximize your itemized deductions, you’ll need to focus on other available deductions such as mortgage interest, property taxes (subject to the $10,000 SALT limitation), charitable contributions, and medical expenses that exceed 7.5% of your adjusted gross income.
If Congress does retroactively extend this deduction in the future, you may be able to file an amended return to claim it. However, tax planning should be based on current law, not on the possibility of future legislative changes.
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