Potentially good news for mortgagees on their deductibles. PMI (private mortgage insurance) may be tax deductible next year? This type of insurance is usually only required if the down payment is less than 20% of the sales price or appraised value (in other words, if the loan-to-value ratio (LTV) is 80% or more). Once the principal is reduced to 80% of value, the PMI is often no longer required.
The unofficial word is that “PMI deductibility” is on tap for a vote in the coming months, but it is part of a larger bill. Washington and the administration are still assessing the impact of what they can do and not do after the election, especially in the House of Representatives where the Republicans took control and campaigned on aggressively reducing the federal deficit. But the potential of allowing a greater write-off is there. And yes, there have been rumors of the mortgage write-off being discontinued. Most believe that this is such a “sacred cow” with consumers and legislators that it will be left untouched (or may apply to mortgages under $1,000,000 – the vast majority of loans in the US).