In February of 2018, Congress extended deductions on mortgage premiums for 2017. The decision was signed into law by President Trump as part of the Bipartisan Budget Act of 2018, allowing homeowners to deduct the amount they paid for mortgage insurance in 2017 when filing their taxes. The deductions had originally expired at the end of 2016.
Where Servicers are required to issue Form 1098s to borrowers no later than January 31st each year, mortgage insurance premiums would usually have been reported in Box 5 IF section 163(h)(3)(E) applies for the applicable tax year. However, since the decision to extend these deductions did not go into effect until February, Servicers who met the filing requirement deadline to issue Form 1098 to borrowers would have done so without completing Box 5 on the form. This means that qualifying borrowers who paid mortgage insurance premiums in 2017 and had filed their taxes prior to February of this year, would not have claimed the deduction.
For borrowers who have not yet filed their taxes, a new 1098 will be sent with the amount of mortgage insurance premiums paid for 2017 included in Box 5. Once this new form arrives, borrowers may file their taxes as they normally would in order to claim the deduction.
For borrowers who have already filed their taxes for 2017, an amendment will need to be filed in order to claim the deduction. It is best to speak with your accountant or tax advisor to ensure that the proper steps are taken before filing an amendment.
Mortgage Insurance, which is sometimes called private mortgage insurance, or “PMI,” is a fee assigned to borrowers who do not make a down payment of at least 20%. This fee is intended to protect lenders in the event that a borrower was to default on a loan. With the extension in deductions, borrowers with an adjusted gross income no greater than $100,000 will be able to deduct 100% of their mortgage insurance premiums. This will result in hundreds of dollars in savings for qualifying homeowners.
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As a result, Mortgage Investors Group and its affiliates do not provide tax advice. For educational purposes only.
Please contact a qualified professional for specific guidance.
