Is mortgage insurance tax deductible?

Keith Gumbinger

Yes. No. Yes. No. Yes. That's the ever-changing answer to the question "Is PMI tax deductible?"

If you put down less than 20 percent when you purchased your home, chances are you're paying mortgage insurance. The deductibility of PMI premiums has been an on-again, off-again affair for years, but homeowners are again in luck for tax year 2021, as it is "on" again.

The tax deduction for PMI premiums (or Mortgage Insurance Premiums (MIP) for FHA-backed loans) is not part of the tax code, but since the financial crisis has generally been authorized by Congress as parts of other bills and "extended" to cover the most recent tax year. That's the case for tax year 2021, but this may change in the future.

You can find the amount of mortgage insurance premiums you paid on the Form 1098 that your lender or servicer sends to you each year. It is listed in box 5, separate from the mortgage interest you paid (box 1).

The official IRS code covering the deductibility of mortgage interest (which now includes PMI premiums) can be seen in Publication 936. However, official IRS documents have not yet been updated to reflect this change for 2021, but of course will be when the annual revisions and updates are put in place on the IRS website. Presently, the 2021 "draft" version of Publication 936 is on the IRS website, but it not yet official.

Related: HSH's comprehensive Guide to Mortgage Insurance

As when the deduction for PMI costs were last regularly available (for MI premiums paid though 2017), there were limitations. The PMI policy's mortgage had to be originated after 2006; the deduction was reduced once your Adjusted Gross Income (AGI) exceeded $100,000 ($50,000 if married filing separately) and completely eliminated with an AGI above $109,000 ($54,500 married filing separately). When available, premiums for mortgage insurance are usually treated exactly the same as mortgage interest for deduction purposes.

Of course, with the standard deduction raised significantly as a part of the Tax Cuts and Jobs Act of 2017 (TCJA), many homeowners who might have formerly itemized mortgage-related deductions in order to deduct the mortgage interest and PMI premiums they paid now simply take the standard deduction, which simplifies filing returns.

Homeowners who have sufficient mortgage interest and other qualified expenses to get above the standard deductions of $25,100 (married filing jointly) or $12,550 (single or filing separately) will need to itemize these expenses on 1040 Schedule A.

Calculator: Learn PMI costs and when you can cancel PMI

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Keith Gumbinger
Keith Gumbinger
Mortgage Expert
Vice President, HSH.com
About Keith: Mortgage market observer and analyst with 35 years experience... (more)
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