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Tuesday, March 18, 2014
Mortgage insurance premiums paid to the Department of Veterans Affairs (VA), the Federal Housing Administration (FHA), the Rural Housing Service, and private mortgage insurers
Although not really interest, you can deduct as interest on Schedule A mortgage insurance premiums paid to the Department of Veterans Affairs (VA), the Federal Housing Administration (FHA), the Rural Housing Service, and private mortgage insurers on contracts issued after 2006 for used to buy, build, or substantially improve a primary or secondary personal residence.
The deduction is phased-out if your Adjusted Gross Income (AGI) is between $100,000 and $109,000 ($50,000 and $54,500 if married filing separately) at a of 10% for each $1,000 ($500 if filing separately), or part thereof, of excess AGI. The $100,000 threshold applies whether you are single or married filing a joint return.
Sometimes a homebuyer will pay a lump-sum premium for several years up-front at the closing. In this situation you must allocate the payment over the term of the loan or 84 months, whichever is shorter.
The amount of qualified premiums paid is reported in Box 4 of the Form 1098 you receive from the bank or mortgage .