If you’ve been paying for private mortgage insurance every month because you put down less than 20% on your home, you may be able to get some of that money back by claiming the PMI deduction on your federal income tax return. Keep in mind though, the dedution expires with tax year 2014 unless Congress renews it.
Do You Qualify for the Deduction?
You got your loan in 2007 or later; Your mortgage is for your primary residence or a second home that’s not a rental property; Your adjusted gross income is no more than $109,000. The deduction begins to phase out once your adjusted gross income (AGI) exceeds $100,000 ($50,000 for married filing separately) and disappears entirely at an AGI of more than $109,000 ($54,500 for married filing separately).
How to File for the PMI Deduction
You’ll have to itemize and use Schedule A. – If you make no more than $100,000 a year, put the amount of insurance premiums you paid last year on Line 13. Don’t include pre-paid premiums for this year. You’re doing taxes based on last year’s income and expenses, so this year’s premiums don’t count even if you pre-paid them last year. If your adjusted gross income is between $100,000 and $109,000, use the worksheet included with Schedule A to figure out how much you get to deduct.
The Best Savings of All: Canceling Your PMI
You can cancel your PMI when you have 20% equity in your home. Lenders are required to automatically cancel it once you have 22% equity. If you think you’re at that threshold, find out more about canceling your PMI.