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Key takeaways
- The mortgage insurance (PMI) deduction has expired for 2022, and guidelines for the 2023 tax year have not yet been determined.
- For eligible years, PMI is deductible only if you itemize your tax deductions.
- Most borrowers pay mortgage insurance premiums when putting down less than 20 percent on a home.
You might not know it, but in 2019, Congress reintroduced a federal tax deduction for private mortgage insurance (PMI). This allowed homeowners who were paying mortgage insurance the ability to write off the premiums for tax years 2018, 2019, 2020 and 2021 if they itemized their tax deductions. The deduction is not currently available for the 2022 and 2023 tax years.
Keep in mind: Monday, April 15 is the 2024 tax filing deadline.
Is mortgage insurance tax-deductible?
No, private mortgage insurance isn’t tax-deductible. The mortgage insurance deduction was made available again for eligible homeowners for the 2018, 2019, 2020 and 2021 tax years. It has not been renewed for the 2022 and 2023 tax years.
PMI tax deduction requirements
To take the PMI tax deduction for tax years 2018, 2019, 2020 or 2021, keep in mind:
- The deduction is allowed only if the mortgage for which you pay PMI was taken out on or after Jan. 1, 2007.
- A home refinanced after Jan. 1, 2007 still qualifies for PMI deduction if it is your primary residence.
- A second home might qualify for the deduction if the mortgage was taken out on or after Jan. 1, 2007, but it depends on how the home is used. PMI on a second property only qualifies if the home is used by you personally, not rented out.
There are also restrictions to PMI deductions, including:
- The mortgage insurance deduction will only apply to refinanced funds up to the original loan amount, not any extra cash you took out with the new loan.
Once again, this tax deduction is not available for the 2022 and 2023 tax years.
How much can you save with the PMI tax deduction?
Homeowners typically pay between $30 and $70 a month in PMI premiums for every $100,000 of financing, according to Freddie Mac estimates. However, the size of the down payment, loan type and lender requirements can all affect your actual cost.
How much you can save depends on how much you owe and your tax bracket. Let’s say your adjusted gross income is $100,000 and you’re paying $120 per month in PMI premiums. Assuming you itemize deductions and that you can fully deduct all of the premiums, you would reduce your taxable income by $1,440.
PMI tax deduction calculation example
In this case, if you’re in the 20 percent bracket, your annual tax savings would be in the neighborhood of $288 annually ($1,440 X .20).
PMI tax deduction FAQ
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No, the mortgage insurance tax deduction has not been available since the 2021 tax year.
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Mortgage insurance premiums on any loans, including FHA loans, are not tax deductible at this time.
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Once your loan-to-value ratio falls below 80 percent, you can request in writing that your mortgage servicer cancels your PMI.
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