Contact: MICA (202) 682–2683
Email: pat@micadc.org
President Signs Three-Year Extension of Federal Tax Deduction for Mortgage Insurance Premiums
WASHINGTON, D.C. December 20, 2007 – Legislation to extend the federal tax deduction allowing homeowners with low down payment mortgages to deduct the cost of their government or private mortgage insurance premiums for three more years has been signed into law by President Bush.
Qualified borrowers will be able to take the deduction if their insured mortgage originates between 2007 and 2010.
The deduction was first approved late in 2006 and initially applied only to the 2007 tax year. Extension of the tax deduction for mortgage insurance premiums was part of the Mortgage Forgiveness Debt Relief Act of 2007 approved earlier this month by both the U.S. House of Representatives and the U.S. Senate.
The tax break for mortgage insurance premiums is for families with an adjusted gross income of $100,000 or less. Families with incomes up to $109,000 are eligible for a partial deduction.
“Continuing this tax deduction will help low- and moderate- income consumers, particularly first-time home buyers who are unable to put down 20 percent,” said Kevin Schneider, president of the Mortgage Insurance Companies of America (MICA). “On average, the annual tax break could be worth $350 per taxpayer.”
Even with home prices declining in many areas, many families find it difficult to accumulate a 20 percent down payment so the need for insured mortgages with low down payments continues to grow.
“This important tax deduction is a crucial component in keeping the American dream of homeownership alive for many families,” said Suzanne Hutchinson, MICA Executive Vice President. “As risky, exotic loans are no longer considered viable housing finance options, more secure loans with private mortgage insurance remain readily available for qualified borrowers.”