As discussed in our post on December 30, 2019, the tax law that was enacted on December 20, 2019 retroactively extended the deduction for private mortgage insurance premiums (“PMI”), so the deduction is available for the 2018, 2019 and 2020 tax years. (The deduction had previously expired after 2017, and had not been extended while 2018 tax returns were being prepared.)
The deduction is subject to a phaseout that begins when adjusted gross income exceeds $100,000. Clients with income below the phaseout are permitted to deduct PMI as part of the mortgage interest deduction on Schedule A.
Clients who have PMI reported to them on Form 1098 for the 2019 tax year may benefit from the deduction in 2019, if their income is below the phaseout threshold. In addition, for such clients, practitioners should also determine if there was PMI reported for the 2018 tax year. If so, the client may benefit from amending the 2018 return to claim the deduction for PMI.