President signs extension of IRS deduction for mortgage Insurance

WASHINGTON – Dec. 21, 2007 – President Bush signed legislation yesterday that extends the IRS tax deduction for private mortgage insurance (PMI) premiums. Qualified borrowers get the deduction for mortgage originations 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 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.

Families with an adjusted gross income of $100,000 or less may use the PMI tax break. Families with incomes up to $109,000 receive 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,” says 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 downpayment.

“This important tax deduction is a crucial component in keeping the American dream of homeownership alive for many families,” says 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.”

© 2007 FLORIDA ASSOCIATION OF REALTORS®

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