When you bought your home, did you put down less than 20% for your down payment? If so, there’s a good chance you’ve been paying private mortgage insurance (PMI). PMI helps a lot of folks qualify to purchase homes, but there’s no way to sugarcoat the fact that it’s also another monthly payment added to your list of bills.
The silver lining over the last decade or so has been the mortgage insurance premium deduction, which allows households with an adjusted gross income of $100,000 or less to deduct 100% of their PMI premiums.
This law lapsed at the end of 2016, which meant homeowners would not be able to take the mortgage insurance premium deduction any longer. However, on February 9, 2018, Congress passed the Bipartisan Budget Act of 2018, which retroactively extended a number of tax provisions for the 2017 tax year.
One such provision? The reauthorization of deducting mortgage insurance premiums for the 2017 tax year.
What This Change Means for Your 2017 Tax Return
In January 2018, you should have received a 1098 disclosing mortgage interest paid for 2017; in accordance with IRS requirements, these forms must be mailed on or before January 31, 2018.
Of course, as previously mentioned, the new law was passed on February 9, 2018. Based on the change, the IRS is requiring that corrected 1098’s be issued to borrowers by March 15, 2018. If you paid PMI during 2017, you should have hopefully received your amended 1098 tax form by now.
Haven’t filed your taxes yet? Great. You’ll just need to supply your tax professional with the new 1098 (along with all of your other tax information) and make sure they know the mortgage insurance deduction is still in play for the 2017 tax year.
Did you already file your taxes? Consult your tax professional about steps you may need to take to amend your return.
Don’t Overlook Your Mortgage Insurance Premium Deduction
In 2015—the most recent year for which statistics are available—about 4.1 million homeowners took mortgage insurance premium write-offs averaging more than $1,500. At this point, it is unknown if this deduction will continue next year or at any point in the future—so take advantage of this opportunity to claim a deduction you thought was long gone.