Is Private Mortgage Insurance Tax Deductible?

Private Mortgage Insurance (PMI) protects the mortgage lender, not the borrower, in the event a homeowner defaults. Lenders typically require PMI when a homebuyer makes a down payment of less than 20% of the home’s purchase price, adding to the monthly mortgage payment. For the 2024 tax year, the ability to deduct qualified mortgage insurance premiums on federal income taxes is not available. This deduction has been a temporary provision in the past, subject to legislative extensions.

Eligibility for the PMI Deduction

The PMI deduction expired at the end of 2021 and has not been extended for 2022, 2023, or 2024 tax years. When the deduction was available, specific criteria had to be met. The mortgage had to be issued on or after January 1, 2007. This deduction only applied to mortgage insurance for “qualified acquisition debt” on a primary residence or a second home, but not for rental properties. Qualified acquisition debt refers to debt incurred to buy, build, or substantially improve the home.

Taxpayers could claim the PMI deduction only if they itemized deductions on Schedule A (Form 1040). Income limitations also impacted eligibility. The deduction began to phase out for taxpayers with an Adjusted Gross Income (AGI) exceeding $100,000, and it was completely eliminated for those with an AGI above $109,000. For married individuals filing separately, the phase-out began at $50,000 AGI and was completely eliminated above $54,500.

The mortgage insurance premiums had to be for insurance provided by the Department of Veterans Affairs (VA), Federal Housing Administration (FHA), or private mortgage insurance (PMI) companies. This included both annually paid premiums and certain prepaid premiums.

Reporting the PMI Deduction

When the PMI deduction was available, lenders reported the amount of mortgage insurance premiums paid during the year on Form 1098, Mortgage Interest Statement. This amount was generally found in Box 5 of Form 1098.

For eligible tax years, taxpayers claiming the deduction would report it on Schedule A (Form 1040), Itemized Deductions. The specific line for qualified mortgage insurance premiums was typically Line 8d on Schedule A. Tax preparation software or a tax professional would calculate the deductible amount, especially if the Adjusted Gross Income (AGI) phase-out applied.

Important Considerations for 2024

The deduction for mortgage insurance premiums is not available for the 2024 tax year. This means homeowners cannot include these payments as itemized deductions on their 2024 federal income tax returns. The last year this deduction was available was 2021, and Congress has not extended it for subsequent tax years.

This deduction has historically been a temporary provision, often extended through specific legislative actions. Without further legislative action, the deduction remains unavailable for current and future tax years. Taxpayers should consult official IRS publications or a qualified tax professional for the most current information, as tax laws can change.