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I know this is a tax question but NO ONE seems to know the answer on my end and someone HAS to have gone through tax time after the purchase of a new home.
I paid $2500 up front PMI at closing (on HUD-1). The PMI was then rolled back into the loan. Received 1098 from WF and it lists $290 paid for PMI (it's a separate line item on the 1098). So, can I deduct $2790 on my federal return or can I only deduct the $290 listed because it's somehow being amortorized over the life of the loan?
cpa question for sure.
i would provide a copy of that form along with the settlement statement to my cpa.
@Anonymous wrote:I know this is a tax question but NO ONE seems to know the answer on my end and someone HAS to have gone through tax time after the purchase of a new home.
I paid $2500 up front PMI at closing (on HUD-1). The PMI was then rolled back into the loan. Received 1098 from WF and it lists $290 paid for PMI (it's a separate line item on the 1098). So, can I deduct $2790 on my federal return or can I only deduct the $290 listed because it's somehow being amortorized over the life of the loan?
The amount that the mortgage insurance company puts in box 4 is the amount you can deduct. They are amortizing the upfront premium over 84 months which is required. The upside is that if you refinance or sell the house, you would receive a portion of that premium back.
I'm not a CPA so I can't give you tax advice.
The initial 1098 I received from WF had the total of the monthly premium paid over the 3 months I paid the mortgage. When I called WF to inquire about whether the upfront PMI was deductible, they told me "You can only deduct what is on your 1098". A week later, I then received a corrected 1098 from them with the up front PMI included along with the monthly amount. All I know is that the corrected 1098 will be filed with the IRS so I'm doing what I was told, going with what's on my current 1098 (corrected).
This leads me to think that when I refiance and get a refund of the PMI and then repay it on the new loan, the refund might be considered income but will be offset by the new PMI. I know I"m not making much sense but if you get a 1098 that doesn't show the up front premium, check with you lender to make sure they did things right on their end.