Tips On The MIP Tax Deduction
How to Get Your MIP Tax Deduction – Effective Through 2013
The MIP Tax Deduction was part of the American Taxpayer Relief Act of 2012 (effective through 2013), MIP tax dedution was recently passed. There are 7 points to keep in mind:
1 – The deduction applies to “qualified residences,” as defined in the Internal Revenue Code. Generally, that includes the borrower’s primary residence and a non-rental second home.
2 – As with mortgage interest, borrowers can deduct mortgage insurance premiums paid on both their primary residence and one other qualified residence each year. Investor loans are not eligible.
3 – Households with adjusted gross incomes of $100,000 or less will be able to deduct 100% of their MI premiums.
4 – The deduction is reduced by 10% for each additional $1,000 of adjusted gross household. Income, phasing out after $109,000. Details in link below.
5 – Married individuals filing separate returns who have adjusted gross incomes of $50,000 or less will be able to deduct 50% of their MI premiums.
6 – The deduction is reduced by 5% for each additional $500 of adjusted gross income, phasing out after $54,500. Details in link below.
7 – The deduction is not restricted to first-time home buyers.
Further information on the MIP Tax deduction can be found at MGIC’s site: http://www.mgic.com/ordering-mi/tax-deductible.html.
We have provided this information to make our clients aware important home buying issues. If you are interested in buying a home in Tucson, we can help. We suggest you contact your tax adviser to learn how the MIP Tax Deduction might effect your specific tax filing.
Another key piece of the mortgage process is the Good Faith Estimate provided by the lender. It provides detail of all the costs related to obtaining a mortgage.
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