Many homeowners are not aware that the American Taxpayer Relief Act of 2012 has been extended. The law which expired in 2011 is once again extended for this year to help homeowners with their mortgage and to help boost the revitalizing real estate market. So what is the mortgage insurance deduction? If you are not familiar with the mortgage insurance deduction, here are three facts that you may find informative. Hopefully if you are paying your mortgage, you will find these mortgage insurance deduction facts helpful.
First, mortgage insurance deduction is dedications for home insurance. In this, your mortgage insurance premium is tax deductible. The dedications for mortgage insurance premium are available for homeowners that meet its requirements or have mortgage insurance. Mortgage insurance is the type of insurance that protects the lenders in case of default. So for example, if your bank gives you a loan as homeowner and then you suddenly stop making payment, your lender bank will take the loss. This is where mortgage insurance comes in. Mortgage insurance will protect your bank against the loss. The bank can now make a claim to the insurance company. Generally the mortgage insurance is part of the mortgage. It is also the lender that processes the insurance. This is the reason why many homeowners are not familiar with this and with mortgage insurance premium deductions.
The second thing that you should know about mortgage insurance deduction is that the law made it retroactive. This means that it covers both 2012 and 2013. You can therefore include your mortgage insurance premium deduction on your filing for this year. You can make the mortgage insurance deduction part of your tax deductible expense. Now, when it comes to the amount of deduction, you can have 100 percent of your mortgage insurance deduction premium if your adjusted gross income is not more than $100,000. Now, if your income is more than $100,000 you can still get the mortgage insurance deduction but not 100 percent . It depends on your income. Basically it decreases as your income increases.
Third, all types of mortgage insurance is considered as mortgage insurance deduction. This includes the private mortgage insurance as well as the mortgage insurance premium. Taking into consideration the mortgage insurance deduction, the cost of your mortgage can be significantly reduced. This is why it is important to talk to your accountant to make sure that you take full advantage of the extension of the American Taxpayer Relief Act of 2012.