Alyssa Lane
The tax deductibility of private mortgage insurance (PMI) has been an inconsistent affair over the years, with the provision being extended multiple times since its introduction in 2006. However, the tax deduction for PMI expired at the end of 2021, and Congress has not extended it since. This means that homeowners cannot claim a deduction for PMI premiums on their federal income taxes from the 2022 tax year onwards. Nevertheless, homeowners may be able to leverage other tax deductions, and it is advisable to consult a tax professional to determine the available options.
| Characteristics | Values |
|---|---|
| Tax deductibility for mortgage insurance premiums and PMI costs | Comes and goes according to the whims of Congress |
| Tax deduction for private mortgage insurance | Expired at the end of 2021 |
| Homeowner's insurance premiums tax-deductible | Only if the property creates a source of income |
| Private mortgage insurance tax-deductible | On and off in recent decades |
| Mortgage insurance premium tax deduction | Expired |
| Mortgage insurance premium deduction | Available through tax year 2020 |
| Other characteristics | Values |
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What You'll Learn
Private mortgage insurance (PMI) tax deductibility
Private mortgage insurance (PMI) is typically required when homebuyers put down less than 20% of the home's purchase price. PMI protects the lender if the borrower defaults on the loan. Introduced by the Tax Relief and Health Care Act of 2006, the tax deduction for PMI was allowed for mortgages originating in 2007 or later. However, this deduction was not permanent and has since expired.
The tax deduction for PMI was extended multiple times since its introduction. The Protecting Americans from Tax Hikes (PATH) Act of 2015 extended the deduction for the 2015 tax year, and the Bipartisan Budget Act of 2018 retroactively extended it for 2017. In 2019, the deduction was retroactively applied to 2018 and 2019 as well. The Further Consolidated Appropriations Act of 2020 allowed the PMI deduction for tax years 2018 through 2021.
The PMI deduction expired at the end of 2021 and was not extended for 2022 or later tax years. This means that homeowners can no longer claim a deduction for PMI premiums on their federal income taxes. However, those who qualify and are working on past years' taxes may still be able to amend old returns to claim the PMI deduction retroactively.
While the PMI deduction is currently unavailable, homeowners can explore other tax deductions. For example, the mortgage interest paid annually is still tax-deductible within certain parameters. Additionally, state and local real estate taxes may also be deductible depending on the area.
There have been efforts to reinstate the PMI deduction. In February 2025, the Mortgage Insurance Tax Deduction Act of 2025 was introduced, but it has yet to become law. Homeowners awaiting the outcome of this legislation can consult with financial advisors to determine their eligibility for amending past returns and potentially claiming the PMI deduction.
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Homeowners Protection Act
The Homeowners Protection Act (HPA or PMI Cancellation Act) was signed into law on July 29, 1998, and came into effect on July 29, 1999. It was later amended on December 27, 2000, to provide technical corrections and clarification. The Act establishes provisions for cancelling and terminating private mortgage insurance (PMI), which is insurance that protects lenders from the risk of default and foreclosure. It also sets disclosure and notification requirements and requires the return of unearned premiums.
Prior to the Act, homeowners experienced problems when trying to cancel PMI coverage. Lenders may have agreed to terminate coverage when the borrower's equity reached 20%policies and procedures for cancelling or terminating PMI coverage varied widely among lenders. The Act now protects homeowners by prohibiting life-of-loan PMI coverage for borrower-paid PMI products and establishing uniform procedures for the cancellation and termination of PMI policies.
To cancel PMI coverage under the Homeowners Protection Act, a homeowner must:
- Submit a request in writing to the servicer to initiate cancellation.
- Have a good payment history with respect to the residential mortgage.
- Be current on the payments required by the terms of the residential mortgage transaction.
The Dodd-Frank Act granted the Consumer Financial Protection Bureau (CFPB) the authority to supervise and enforce compliance with the Homeowners Protection Act for entities within its jurisdiction. The CFPB's examination procedures for the Homeowners Protection Act include notifying the mortgagee or servicer of any failure to comply with the provisions of the Act and requiring them to correct the account of the mortgagor to reflect the date on which the mortgage insurance should have been canceled or terminated. The CFPB can also require the mortgagee or servicer to reimburse the mortgagor for any unearned premiums paid after the date on which the obligation to pay those premiums ceased.
It's worth noting that the itemized deduction for mortgage insurance premiums expired as of 2021. The deductibility of PMI premiums has been an on-again, off-again affair, depending on the decisions of Congress. When available, premiums for mortgage insurance are usually treated the same as mortgage interest for deduction purposes. However, with the standard deduction raised significantly as a part of the Tax Cuts and Jobs Act of 2017 (TCJA), many homeowners now simply take the standard deduction, simplifying their tax filings.
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Tax Cuts and Jobs Act of 2017 (TCJA)
The Tax Cuts and Jobs Act of 2017 (TCJA) was signed into law by President Trump in 2017. It is an unofficial name for a large set of changes to the Revenue Code of 1986. The TCJA made many significant changes across multiple areas of the tax code, including reducing the corporate tax rate, increasing the standard deduction, and increasing the applicable exclusion amounts for estate taxes.
The TCJA significantly impacted the standard deduction, increasing it from $6,500 to $12,000 for individual filers, from $13,000 to $24,000 for joint returns, and from $9,550 to $18,000 for heads of household between 2017 and 2018. The TCJA also eliminated or restricted many itemized deductions for 2018 through 2025. This included changes to state and local tax (SALT) deductions, which were capped at $10,000. Additionally, the deduction for interest on home mortgages was altered, reducing the mortgage limit to $750,000, down from the pre-TCJA limit of $1 million. Homeowners could no longer deduct interest paid on home equity loans unless the debt was used to buy, build, or substantially improve the taxpayer's home.
The TCJA also included changes to personal taxes. It repealed personal and dependent exemptions and, in their place, increased the standard deduction and the child tax credit (CTC). It also created a new $500 tax credit for dependents not eligible for the CTC. The TCJA also changed the measure used for inflation indexing from the Consumer Price Index for All Urban Consumers (CPI-U) to the chained CPI-U.
The TCJA also had a significant impact on businesses and investors. It permanently reduced the corporate tax rate to a flat 21% rate, changed flow-through taxation, increased depreciations, and made fundamental changes to taxing international income. Additionally, the TCJA enacted a 100% bonus deduction for business assets purchased through the end of 2022 and increased many expensing provisions that phase out after 2022.
It is important to note that only some of the TCJA changes were permanent, and many provisions will expire by the end of 2025. The individual tax provisions were made temporary to limit the 10-year revenue cost of the TCJA and comply with Senate budget rules.
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Homeowner Assistance Fund (HAF) program
The deductibility of mortgage insurance premiums has been inconsistent over the years. The itemized deduction for mortgage insurance premiums expired in 2021. Homeowners who took out or refinanced a mortgage before 2021 may have qualified for the PMI tax deduction depending on their income. However, this federal tax provision has now expired.
The Homeowner Assistance Fund (HAF) program was established to provide financial assistance to eligible homeowners to prevent mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services, and displacement of homeowners experiencing financial hardship after January 21, 2020, due to the COVID-19 pandemic.
The HAF program is a federal initiative overseen by the U.S. Department of the Treasury and administered by states, territories, and tribes. The program provides grants to struggling homeowners to help them catch up on mortgage payments, utility bills, and other housing costs. The grants do not need to be repaid. The amount of assistance provided varies by state, with some states offering up to $65,000 per household, while others provide up to $120,000.
The HAF program has been successful in assisting underserved communities. According to data from the U.S. Treasury Department, 88% of HAF recipients had incomes at or below the area median income (AMI), with 51% earning 50% or below AMI. Additionally, 39% of beneficiaries identified as Black, and 19% as Latino.
To effectively reach eligible homeowners, the HAF program collaborates with various partners, including non-profit organizations, utility providers, loan servicers, tax assessors, homeowner associations, and property insurance providers. These partnerships have been crucial in providing application assistance, legal services, and housing counseling to program participants.
As of April 15, 2025, the Texas Homeowner Assistance Program, for example, is closed and no longer assisting homeowners. However, other states, such as Montana, Nevada, and North Dakota, still have open HAF programs.
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Itemized deductions
The itemized deduction for mortgage insurance premiums expired in 2021. This provision has not been extended by Congress. This means that homeowners can no longer claim a deduction for private mortgage insurance (PMI) premiums on their federal income taxes starting from the 2022 tax year. The mortgage insurance deduction only applied to refinanced funds up to the original loan amount, not any extra money from a new loan.
The deductibility of PMI premiums has been inconsistent over the years. When available, premiums for mortgage insurance are usually treated the same as mortgage interest for deduction purposes. With the standard deduction raised as part of the Tax Cuts and Jobs Act of 2017 (TCJA), many homeowners who formerly itemized mortgage-related deductions now take the standard deduction, simplifying the filing of returns.
Homeowners who took out or refinanced a mortgage before 2021 may have qualified for the PMI tax deduction, depending on their income. Homeowners can still leverage other tax deductions to their benefit. For example, if you own a property strictly for investment purposes, you can deduct the entire amount of your premiums as a business expense.
It is important to note that homeowners insurance premiums are generally not tax-deductible unless the property creates a source of income or is a rental property.
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Frequently asked questions
Private mortgage insurance (PMI) has been tax-deductible for homeowners off and on in recent decades. The tax deduction for private mortgage insurance expired at the end of 2021 and is not available for the 2022 tax year or subsequent tax years.
PMI is private mortgage insurance. Homeowners typically pay between $30 and $70 a month in PMI premiums for every $100,000 of financing. If you put down less than 20% when you purchased your home, you are likely paying mortgage insurance.
If you own a property strictly for investment purposes, you will be able to deduct the entire amount of your premiums as a business expense. Additionally, homeowners insurance premiums are tax-deductible if the property creates a source of income, such as a rental property.
