Question: Since we purchased our home last spring we
have been making the monthly mortgage payments, which include
a monthly private mortgage insurance (PMI) payment of $128.00.
My accountant says that I can deduct the interest on my mortgage
loan (plus the property taxes), but I cannot deduct the $128.00
monthly PMI payment. Isn’t this PMI payment simply another interest
charge?
Answer: The current tax laws do not permit an interest
deduction for the PMI payment (unless the PMI payment was “rolled
into” the original mortgage loan). The reason is unclear, as the
PMI payment is similar to interest in being the cost of acquiring
the loan. Inasmuch as PMI is not required if the buyer can make
a 20% down payment, the inability to deduct PMI adversely affects
mostly low-income buyers.
