Yes, you read that headline correctly, but there are some key provisions according to the Pennsylvania Association of Realtors, so read on.
Firstly the idea is to help those most unable to buy a home and give them some relief from 80-20 mortgages to avoid PMI.
- Applies only to mortgage insurance policies issued in 2007
- Does not apply to premium payments for policies issued in prior years
- Applies to private mortgage insurance and to FHA, VA and Rural Housing premiums. The premiums will be treated as mortgage interest.
- Is available only to individuals or families with less than $100,000 adjusted gross income on a joint or single tax return ($50,000 for married filing seprate returns)
- The provision phases out by 10% for each $1,000 of income over $100,000 ($50,000 for married filing seperately). Therefore there is n o deduction for individuals or families with incomes over $110,000 ($55,000 for marrieds filing seperately).
- Individuals who claim the deduction are not allowed to pre-pay the premium that are otherwise due after 2007. The provision expires for any premium payment that is paid or that accrues after December 31st 2007.
- If a mortgage (other than a VA, FHA or RHA mortgage) is pre-paid during 2007, the unammortized premium balance on that mortgage is not deductible. (The unamortized premium balance is the amount of the premium that would have been paid in a particular year if the payments had extended throughout that year)
- The homeowner will receive a statement from either the lender or the mortgage insurance provider stating the proper amount of the deduction. That information will also be provided to the IRS.
- The deduction will not be available if an exisiting mortgage is refinanced in 2007 for an amount larger than the amount being refinanced.
Hope this helps you, any comments from mortgage brokers or bankers to clarify or comment gladly accepted...
If you are buying or selling on or around Tredyffrin Easttown or along the Main Line we can help you, contact us or connect
Feel free to subscribe to our blog to stay up to date with our latest posts and information on the Tredyffrin Easttown and Main Line Real Estate Market.