topic PMI in Mortgage Loans

PMI

Anonymous — Mon, 12 Jan 2009 18:25:47 GMT

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?

Re: PMI

DallasLoanGuy — Tue, 13 Jan 2009 02:14:51 GMT

cpa question for sure.

i would provide a copy of that form along with the settlement statement to my cpa.

Re: PMI

ShanetheMortgageMan — Tue, 13 Jan 2009 11:22:04 GMT

Also have to consider your income level as well, Dallas is right, advice from a CPA or the IRS is the only advice I'd take.

Re: PMI

Anonymous — Tue, 13 Jan 2009 15:36:42 GMT

Think I will be dealing with the same so If you find out before I do, please let me know.

Message Edited by JR2475 on 01-13-2009 07:36 AM

Re: PMI

itsjustmeibe — Tue, 13 Jan 2009 16:08:28 GMT

@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.

Message Edited by itsjustmeibe on 01-13-2009 08:08 AM

Re: PMI

Anonymous — Sun, 18 Jan 2009 21:10:02 GMT

Interesting development that might help people in the future. I e-mailed Wells Fargo and asked what amount I should use. They told me to use whatever was in box 4 of my 1098 which was $231. I just received a correct 1098 that includes both the upfront payment and monthly payment totals for 2008. So now the amount is $2762! Nice!

Re: PMI

Anonymous — Mon, 19 Jan 2009 15:36:46 GMT

Thanks that's great info as I will bringing this to the attention of my CPA doing my taxes. I thought that I had read that this was the case.

Re: PMI

Anonymous — Mon, 19 Jan 2009 20:05:24 GMT

So just to make sure I understand correctly, the 1.5% PMI I paid up from is fully deductable and then whatever PMI I pay monthly through my loan payment is deductable for the year I pay it in?

Re: PMI

Anonymous — Mon, 19 Jan 2009 21:16:31 GMT

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.

Re: PMI

Anonymous — Tue, 20 Jan 2009 03:08:29 GMT

Suzie, did you finance the UPMI or did you pay it outright?

I think that's supposed to matter. I've heard that you CAN deduct UMIP and UPMI, but ONLY if it's paid in "cash" -- not if it's financed.

If financed UMIP/UPMI can be deducted, I will be one majorly happy camper!!

Re: PMI

Anonymous — Tue, 20 Jan 2009 03:54:17 GMT

I can't recall specifically but I know it was a line item I paid for at closing. I would think that since it's now on my 1098, it probably was paid up front and not added to the loan.