Mortgage Insurance Deduction is in place for ‘07

Just before adjourning the 2006 session, Congress approved legislation which permits an itemized tax deduction for mortgage insurance premiums that begin this year.

The deduction, which treats mortgage insurance the same as interest, will apply to premiums paid or accrued (including on prepaid mortgage insurance) on new acquisition debt for mortgage insurance, but for 2007 only.  The special tax treatment will have to be reauthorized next year to continue.

The deduction, aimed at first-time homebuyers, will be phased out for taxpayers (single or married filing joint returns) with adjustable gross incomes over $100,000.