There are a number of ways one can save a lot of money by just claiming once. PMI premiums can be deducted very easily and it saves you a lot of money. Being an owner of your home, you can deduct the premium from the mortgage insurance.
You are supposed to get done with certain things before this actually happen. If you have got an insurance of your home and you are paying for regularly on monthly basis, some percentage of an amount can be recovered by claiming. By claiming on federal income tax returns, this part of the amount can be recovered. For this purpose, one must be well aware of and familiar with the tax breaks.
Important Facts About Deduction from Mortgage Insurance Premiums
Private mortgage insurance (PMI) has added an extra cost of money to the home’s price. The reason is that if someone cannot pay the down payment at least 20% of total amount, he is supposed to pay the private mortgage insurance. To be safe from PMI, one needs pay at least 20% down payment.
The purpose of mortgage insurance is to keep the lenders on a safe hand. When a borrower takes a loan, he will have to pay it back with interest. If the down payment is lesser than 20% of total amount, the lender does not feel safe to invest his money. To build the trust of the lender, this mortgage insurance is introduced. PMI is all about the coverage of home which you are going to buy.
Premium mortgage insurance has different types. Some of them can use their insurance payments in the form of tax deductions. Private insurance companies have issued various different policies which need to be followed while lending a loan. PMI was introduced by the government in 2007 to help the lenders. However, it was extended considerably in 2014.
Is PMI An Interest
When Interest payments of mortgage and property taxes get increase more than the deductions which customer is supposed to claim, he can categorize all of these deductions. The only certain allowable amount can be claimed by PMI. If someone wants to check the amount which he has to claim, a lender can be contacted to find it out or it can be searched from documents.
Requirements For Premium Deduction
One needs to meet all the following requirements before getting start with mortgage premium deduction. Different companies are offering mortgage insurance. Plaza home mortgage and Franklin American mortgage are renowned ones.
Mortgage insurance premium deduction is available only for those users who have taken the insurance after 2007, so the date is important. Premium deduction will not be possible if it was taken before this date. All the MPI premiums which are issued in 2014 will be able to qualify for a premium deduction of mortgage insurance. Refinancing can also lead to qualify for the premium deduction.
There are two basic requirements for it. Refinance should be done after 2007 and one should carefully structure the refinance. It applies only to the original amount of loan. However, the general requirement is that loan should be issued after 2007.