Orlando Harmon
Private mortgage insurance (PMI) is often required for homebuyers who put down less than 20% on their homes. The tax deductibility of PMI premiums has been inconsistent over the years, subject to changes in legislation and extensions by Congress. While PMI was deductible for tax years 2018 to 2021, it is not deductible for tax year 2024. Homeowners can, however, explore other tax deductions, such as mortgage interest and local real estate taxes.
| Characteristics | Values |
|---|---|
| Tax deductibility for mortgage insurance premiums | Comes and goes according to the whims of Congress |
| PMI deductibility | Not available for tax year 2024 |
| Last year PMI was deductible | 2021 |
| PMI policy's mortgage origination year | After 2006 |
| Deduction reduction limit | $100,000 ($50,000 if married filing separately) |
| Deduction elimination limit | $109,000 ($54,500 if married filing separately) |
| Home mortgage interest deduction | First $750,000 ($375,000 if married filing separately) of indebtedness |
| Higher limitations | $1 million ($500,000 if married filing separately) |
| Applicable for | Tax years 2018 through 2021 |
| Filing | Line 8d of Schedule A (Form 1040) |
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What You'll Learn
Private mortgage insurance (PMI) and tax deductibility
Private mortgage insurance (PMI) is typically required for homebuyers who put down less than 20% of the purchase price of their homes. This insurance protects the lender if the borrower defaults on the loan. While PMI was previously tax-deductible, allowing homeowners to write off premiums, the legislation surrounding this has evolved.
The Tax Relief and Health Care Act of 2006 introduced the deduction for mortgage insurance premiums, and it was initially available for mortgages that originated in 2007 and beyond. Over the years, Congress has made several moves to extend or reinstate this deduction. The Protecting Americans from Tax Hikes (PATH) Act in 2015, the Bipartisan Budget Act of 2018, and the Further Consolidated Appropriations Act of 2020 all played a role in extending the PMI deduction for specific years. However, the deduction expired at the end of 2021, and it is not available for the tax year 2024.
The deductibility of PMI premiums has been inconsistent, with Congress authorizing deductions as part of other bills and extending them to cover the most recent tax years. While the PMI deduction is currently unavailable, homeowners can explore other tax deductions, such as the yearly mortgage interest, which is still tax-deductible within certain limits. Additionally, state and local real estate taxes may also be deductible, depending on the area.
Homeowners who have paid PMI in previous years when it was deductible can review their eligibility for amending old returns to claim the deduction. It's important to note that the deduction had limitations, such as being reduced or eliminated based on the Adjusted Gross Income (AGI) thresholds.
While the future of PMI tax deductibility is uncertain, efforts are being made to convince lawmakers to reinstate the deduction. In February 2025, the Mortgage Insurance Tax Deduction Act of 2025 was introduced, aiming to bring back the PMI tax deduction.
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Mortgage Insurance Premiums (MIP) and tax filing
The tax deductibility of Mortgage Insurance Premiums (MIP) has been an inconsistent affair, changing over the years according to the decisions of Congress. For instance, the Further Consolidated Appropriations Act of 2020 allowed tax deductions for MIP and private mortgage insurance (PMI) for 2020 and retroactively for 2018 and 2019. However, this Act later expired, and currently, mortgage insurance premiums are non-deductible.
The Internal Revenue Service (IRS) states that the itemized deduction for mortgage insurance premiums has expired, and taxpayers can no longer claim it. This is a shift from previous years, as homeowners could previously deduct mortgage insurance premiums as they would mortgage interest. The Tax Cuts and Jobs Act of 2017 significantly raised the standard deduction, leading many homeowners to opt for the standard deduction instead of itemizing mortgage-related deductions.
For loans originated after June 3, 2013, if a down payment of less than 10% of the home's value was made, the borrower must pay the MIP for the life of the loan. FHA loans originated between December 31, 2000, and June 3, 2013, may allow borrowers to cancel the MIP if they have paid off at least 78% of the loan-to-value amount. However, for FHA loans, the MIP is typically non-cancelable.
The amount of mortgage insurance premiums paid can be found on Form 1098, which is sent annually by the lender or servicer. This form details the mortgage payments made over the past year and can impact income tax calculations. When available, premiums for mortgage insurance are generally treated the same as mortgage interest for deduction purposes. However, there have been limitations in the past, such as the deduction being reduced or eliminated based on Adjusted Gross Income (AGI) thresholds.
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Tax deductions for homeowners insurance
Homeowners insurance is typically not tax-deductible. If you use your home as a home – without deriving any income from it – your expenses, including insurance premiums, are not deductible. However, you may be able to deduct a portion of your premiums if you rent out part of your home through Airbnb or another home-sharing app, or if you run a business from your home. If you own a property strictly for investment purposes, you can deduct the entire amount of your premiums as a business expense.
On the other hand, homeowners do enjoy other tax deductions. You can claim these deductions if you itemize your tax return each year. For example, you can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness. If you are deducting mortgage interest from indebtedness incurred before December 16, 2017, the limit is higher: $1 million ($500,000 if married filing separately).
The deductibility of private mortgage insurance (PMI) premiums has been inconsistent over the years, subject to changes in the tax code. The last time PMI premiums were deductible was for tax year 2021. When available, premiums for mortgage insurance are usually treated the same as mortgage interest for deduction purposes.
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Itemizing deductions on Schedule A (Form 1040)
Schedule A (Form 1040 or 1040-SR) is an Internal Revenue Service (IRS) form for US taxpayers who choose to itemize their tax-deductible expenses rather than take the standard deduction. Schedule A is an attachment to Form 1040 that taxpayers use to report their annual income taxes. It is a one-page tax form from the IRS and is divided into six parts, corresponding to the six major categories of itemized deductions people report on their tax returns.
Schedule A is the tax form used by taxpayers who itemize their deductible expenses rather than take the standard deduction. A taxpayer with significant eligible expenses that exceed the standard deduction will file a Schedule A. Eligible expenses include qualified medical costs, some state and local taxes, and some charitable contributions. Generally, if your itemized deductions total up to more than the standard deduction, itemizing your deductions will save you tax money.
Homeowners who have sufficient mortgage interest and other qualified expenses to exceed the standard deductions of $29,200 (married filing jointly) may choose to itemize their deductions to deduct the mortgage interest and PMI premiums they paid. However, the itemized deduction for mortgage insurance premiums has expired, and it can no longer be claimed.
To deduct home mortgage interest, you must file Form 1040 or 1040-SR and itemize deductions on Schedule A (Form 1040). The mortgage must be a secured debt on a qualified home in which you have an ownership interest. Both you and the lender must intend that the loan be repaid. Interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer's home that secures the loan.
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Limitations and eligibility criteria for tax deductions
The tax deductibility of mortgage insurance premiums and PMI costs has been subject to frequent changes over the years, with the availability of deductions depending on the specific tax year in question. For example, the deductibility of PMI premiums was available for tax years 2018 through 2021 but has since expired and is not deductible for tax year 2022 and beyond.
For tax years when the deduction is available, there are certain limitations and eligibility criteria that must be met. Firstly, the PMI policy's mortgage must have originated after 2006. Additionally, the deduction is reduced once the adjusted gross income (AGI) exceeds a certain threshold, which was $100,000 for individual filers and $50,000 if married filing separately in 2021. The deduction is completely eliminated for those with an AGI above $109,000 or $54,500 for married couples filing separately in 2021.
To claim the deduction, eligible taxpayers must file amended federal tax returns and use the deduction on line 8d of Schedule A (Form 1040) for amounts paid or accrued. It is important to note that the deduction only applies to private mortgage insurance (PMI) and mortgage insurance premiums (MIP) for FHA-backed loans and is not applicable to all types of mortgage insurance.
In addition to the eligibility criteria related to the tax year and income thresholds, there are also requirements regarding the mortgage itself. To deduct home mortgage interest, the mortgage must be a secured debt on a qualified home in which the taxpayer has an ownership interest. Both the taxpayer and the lender must intend for the loan to be repaid, and the funds borrowed must be used to buy, build, or substantially improve the taxpayer's home that secures the loan.
While the deduction for mortgage insurance premiums is not currently available, Congress has made several attempts to extend or reinstate this deduction in the past. It is possible that future legislation could once again make mortgage insurance premiums deductible, but as of 2024, the itemized deduction for mortgage insurance premiums has expired, and it can no longer be claimed.
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Frequently asked questions
No, mortgage insurance premium tax deductions are not available for the 2024 tax year.
The last time mortgage insurance was deductible was for the 2021 tax year.
To be eligible for the deduction, the mortgage insurance had to be for a qualified mortgage insurance contract issued after December 31, 2006.
You can calculate your savings by multiplying your claimed deduction by your income tax percentage.
The future of the mortgage insurance deduction is uncertain. However, there have been efforts to convince lawmakers to reinstate it, and a new bill called the Mortgage Insurance Tax Deduction Act of 2025 was introduced in February 2025.
