The 109th Congress has passed a new tax law which will aid hundreds of thousands of homeowners to save an estimated total of $91 million dollars when they file their tax returns in 2008. Private mortgage insurance (PMI) is a policy that helps protect the lender if a borrower stops paying the monthly payment. Most lenders require a borrower to put down 20 percent of the sale price in order to avoid paying PMI.
The new tax law allows taxpayers who itemize their deductions to deduct premiums paid for mortgage insurance. The new insurance premiums deduction will only apply to mortgage insurance contracts issued in 2007 and is only available to taxpayers whose adjusted gross incomes do not exceed $110,000 ($55,000 for married taxpayers filing separately).
