FEDERAL LEGISLATION
ISSUES/BACKGROUND
Presently, borrowers cannot deduct the cost of their mortgage insurance payments for Federal tax purposes.
This proposed change to the tax code would allow homeowners to deduct mortgage insurance premiums when filing itemized tax returns in addition to deducting their mortgage interest payments.
Mortgage insurance provided by federal or private sources would qualify for the deduction.
Making mortgage insurance payments tax-deductible for individuals and families earning less then $100,000 a year will significantly contribute to making the American dream of owning a home come true for many more of consumers.
The average annual tax savings would be $200 a family.
Families with Department of Veterans Affairs of Rural Housing Service (RHS) programs will receive a one-time tax benefit estimated at around $700 for VA and $200 for RHS.
STATUS/OUTLOOK
The Mortgage Insurance Fairness Act (S. 132) was introduced January 24, 2005 and referred to the Committee on Finance. A version is expected to be introduced in the House soon.
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