Is There a Mortgage Insurance Premium Deduction for My Taxes?

Gaining insight into the tax implications of mortgage insurance premiums is essential for homeowners who must pay these costs. While these premiums were once deductible, providing financial relief, recent legislative changes have impacted their deductibility.

In this article, we’ll share the current status of the mortgage insurance premium deduction, its historical context, and recent legislative impacts. We’ll also address common questions to help you determine how these changes might affect your taxes. 

Is there a mortgage insurance premium deduction? 

While it was possible in the past to deduct your mortgage insurance premiums if you itemized your deductions on your federal tax return, you can no longer claim this deduction. The tax law making this possible expired. Premiums paid after December 31, 2021, can no longer be deducted.

Two of the most common types of mortgage protection insurance that borrowers might need to buy are private mortgage insurance (PMI) and mortgage insurance premiums (MIP). 

Lenders often protect themselves from possible losses by requiring mortgage insurance if you make a small down payment—generally less than 20%. Lenders find this helpful because if your loan defaults without much equity, they might be unable to sell your home for enough money to cover their losses. 

Both types of mortgage protection insurance work the same in shielding your lender from some losses if your loan goes into default. The main difference is that PMI applies to conventional mortgages, whereas MIP applies to FHA mortgages.

Is PMI tax-deductible for 2024 taxes?

PMI is a type of mortgage insurance applicable to conventional mortgages. The premiums you pay for PMI are no longer tax-deductible, assuming you paid them after December 31, 2021.

Tax laws continuously change, so consulting with a tax professional can be beneficial if you’re unsure how to treat a specific item for tax purposes. These professionals stay up-to-date on tax laws and are in an excellent position to provide sound advice. 

Is FHA mortgage insurance tax-deductible for 2024 taxes?

The premiums you pay for FHA mortgage insurance, MIP, are no longer tax-deductible. The tax law changed to disallow a deduction for mortgage insurance premiums paid after December 31, 2021.

Impact of recent tax legislation on the mortgage insurance premium deduction

Various legislation drove the previous ability to deduct mortgage insurance premiums from federal taxes. While mortgage insurance premiums were tax deductible for a time, the tax laws allowing this expired, and as a result, this deduction is no longer available. 

• Tax Relief and Health Care Act of 2006: The Tax Relief and Health Care Act of 2006 allowed homeowners to treat mortgage insurance premiums like mortgage insurance for tax deduction purposes. 
• Bipartisan Budget Act of 2018: After the provisions initially authorized under the previous act expired, the Bipartisan Budget Act of 2018 allowed homeowners to claim the mortgage insurance premium deduction for 2017 retroactively.
• Further Consolidated Appropriations Act, 2020: The Further Consolidated Appropriations Act, 2020 was passed to address concerns after this extension expired. This act authorized a continued mortgage insurance premium deduction for 2018, 2019, and 2020.
• Consolidated Appropriations Act, 2021: The deductions allowed under the previous act expired, but the mortgage insurance premiums deduction was extended through December 31, 2021, via the Consolidated Appropriations Act, 2021.

There have been attempts to reinstate this deduction, including the Mortgage Insurance Tax Deduction Act of 2023, which was referred to the House Committee on Ways and Means on June 7, 2023. However, there’s no current indication that this tax deduction will be reinstated in the immediate future. 

For now, mortgage insurance premiums are not tax deductible. Tax professionals make a concerted effort to stay up-to-date on tax law developments. That said, working with a tax professional can be a good way to ensure you benefit from these types of deductions if they’re reinstated in the future.

Ask the expert

Erin Kinkade

CFP®

With the current standard deduction being high (at least through 2025 with known tax law), most individuals have not benefited from itemizing deductions coupled with high housing costs. I wouldn’t deter individuals from buying a home utilizing less than a 20% down payment (and therefore incurring/acquiring either PMI or MIP). In addition, the homeowner can request PMI/MIP to be removed when they have 20% equity in their home.

FAQ

What is a mortgage insurance premium?

A mortgage insurance premium (MIP) is required for FHA loans and other government-backed mortgages. It protects the lender if the borrower defaults on the loan. MIP can include an upfront premium paid at closing and annual premiums added to the monthly mortgage payments.

How do I know if I paid mortgage insurance premiums?

You can check whether you paid mortgage insurance premiums by reviewing your mortgage statements or contacting your mortgage servicer. Your annual tax documents, such as Form 1098, might indicate if mortgage insurance premiums were paid.

What happened to the Mortgage Insurance Tax Deduction Act of 2017?

The Mortgage Insurance Tax Deduction Act of 2017 was introduced but did not progress beyond the introduction stage. Therefore, it did not become law or change the existing tax laws related to mortgage insurance deductions. Consult the IRS or a tax professional for the most current information.