The fiscal-cliff-aversion bill that passed congress late last night had some good news for folks with government-backed mortgages. One of the stipulations of the bill was a two year extension of a 2011 provision that allowed mortgage insurance (mip or pmi) to be tax deductible. The provision mostly applies to borrowers who claim less than $100,000 in income. Borrowers at that income level or lower can deduct 100% of the mortgage insurance they pay upfront in a refinance or that they are paying on a monthly basis. This tax deduction will last through the end of 2013 at least. Borrowers who claim more than $100,000 in taxable income may also deduct some, but not all of the mortgage insurance paid.
This news is especially good for folks who have FHA loans now. If you have an FHA loan, contact us in the sidebar to learn more about the FHA streamline program right away. Or if you have any loan with mortgage insurance, 2013 is a great year to refinance. Not only are rates still near all time lows, but any money that goes toward mortgage insurance is tax deductible for now.