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Mortgage Insurance Premiums Are Tax-Deductible Again

The One Big Beautiful Bill Act permanently reinstates the deductibility of mortgage insurance (MI) premiums for homeowners who itemize deductions. This applies to premiums paid for private mortgage insurance (PMI), as well as government-backed loans through the FHA, VA, and USDA. The deduction had previously expired after the 2021 tax year .



Who Benefits the Most?



This deduction is particularly beneficial for first-time and middle-income homeowners who often pay mortgage insurance due to smaller down payments. By allowing the deduction of these premiums, the law aims to provide meaningful tax relief to these groups


If you’ve already been paying private mortgage insurance, starting in 2025, you can begin deducting it again as an itemized deduction on your tax return.



🧾 Eligibility and Filing Tips



  • Itemization Required: To benefit from this deduction, taxpayers must itemize their deductions. With the standard deduction increased to $15,750 for single filers and $31,500 for joint filers under the new law, some homeowners may find that taking the standard deduction is more beneficial unless their total itemized deductions exceed these amounts . However, the Oregon standard deduction is much lower, so you may benefit from itemizing your Oregon deductions and taking the standard deduction on the federal return.

  • Income Limits: While specific income thresholds for this deduction under the new law haven’t been detailed, historically, the deduction phased out for taxpayers with adjusted gross incomes (AGI) above certain levels. It’s advisable to consult the IRS guidelines for the current limits.

  • Documentation: Ensure you receive Form 1098 from your lender, which reports the amount of mortgage insurance premiums paid. This form is essential for claiming the deduction on your tax return.



💡 Final Thoughts



The reinstatement of the mortgage insurance premium deduction provides significant tax relief for many homeowners. However, with the increased standard deduction, it’s crucial to evaluate whether itemizing deductions is more beneficial for your specific situation. Consulting with a tax professional can help determine the best approach for maximizing your tax benefits. If you would like to book an advisory session with us to discuss your specific circumstances, you can self schedule online here:



We look forward to meeting with you and helping you find strategic ways to save money in taxes.

 
 
 

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