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Can you deduct PMI payments in California?

I am referring to monthly PMI payments, and potentially the upfront initial PMI as well. This would NOT be an FHA loan--it would be a conventional 30 yr refinance through another lender. Can this be deducted from your taxable income, similar to how you deduct mortgage interest?

For the record, I have contacted the IRS and asked them about this. They said yes you can deduct, if you meet the income limits, but I am still not 100% sure since several people have told me you can't do it. Does anyone know for sure?
  • October 03 2011 - Campbell
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Answers (6)

You can deduct MI, which of course, the IRS is your best source for Tax questions.  Essentially, those individuals whom make less than $50k/year ($100k filing jointly) qualify; those whom make between $50k and $54.5k ($100k-$109k jointly) can receive partial.  Above those thresholds, don't qualify.  Also, the deduction expires at the end of 2011 Tax year, so it won't be deductible next (unless Congress extends it again).  Check page 7 for the IRS' statement on the subject (click here).
  • October 04 2011
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It does not matter what state you are in, you asked the right source and the IRS gave you the answer. The deduction is unlike the mortgage interest deduction in that it has to be voted on and approved every year and it is one of the deductions politicians are looking at eliminating if we get tax reform. Whether that happens sooner, later, or never is anyone's guess. See the IRS link and note the adjusted income limits;   

http://www.irs.gov/publications/p936/ar02.html#en_US_2010_publink1000229966

  • October 04 2011
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Profile picture for Sharon Lewis
I would think that if you talked to the IRS and gave them specifics, they would be your best resource. You have to remember as realtors or real estate agents, our area of expertise in real estate, we are not able to give legal advice or tax advice. Go with the expert opinion and not what your friends say or what anyone on these boards say.
  • October 04 2011
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Profile picture for Blue Nile
For most people that qualify, the standard deduction comes out higher.  The benefit is usually not nearly as much as people expect.

It always makes sense to run the numbers both ways.

And the IRS is legally responsible for administering the income tax code, so they are the correct source to ask when there are any questions or special conditions.  Realtors and lenders are not qualified to give tax advice.
  • October 04 2011
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Yes you can
  • October 04 2011
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Yes you can deduct.  This was something signed into law during Bush years, but has been extended by current Obama Administration.  Thankfully, it is still deductible as it helps now that PMI and FHA are integral in home purchases in California and Nationwide.  To further verify,  see link below.

Hope this helps
http://www.pmi-us.com/tax/
  • October 03 2011
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