Misinformation Relating to PMI in a Recent Kiplinger's Article
on December 15, 2009, Kiplinger Online ran an article by Mary Beth Franklin titled New Tax Breaks for Homeowners. For those who are not up to date on tax law changes, this article contained misleading information related to the deductability of private mortgage insurance.
The IRS puts creates Publication 17: Your Federal Income Tax For Individuals every year as a guide for the upcoming tax year which contains specific and sometimes detailed information regarding a variety of topics pertaining to individual taxes. On page 155 (see image below) I have highlighted a passage which qualifies the statements contained in Ms. Franklin’s article (you can see a pdf excerpt here as well.). The article may lead readers to believe that any PMI payments can be deductible in the current year, but this is misleading. The fact is that the deduction is only related to those housing contracts that were signed after December 31, 2006. Furthermore,if you pre-pay PMI, you cannot
claim the deduction as it is only deductible in the period in which the payment was allocated. To put it in simpler terms, if you pay the first 3 months of 2009’s PMI, it cannot be added to the amount paid in 2008 because it was allocate specifically to periods after the end of the current tax year.
As of today, the IRS has not yet published their Home Interest Mortgage Deduction guide, Publication 936, so there is still some more changes that may go into effect for the current year.
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December 17th, 2008 at 1:21 pm
Mary Beth Franklin here. Author of the Kiplinger tax tip in question.
The PMI deduction on 2008 tax returns is available to homeowners who have purchased or refinanced their home since Jan. 1, 2007 and who meet the income eligibility test. The article has been updated to reflect that fact.
December 17th, 2008 at 1:37 pm
Thank you for the heads up Ms. Franklin. I know that many people read Kiplinger and take it’s information at face value, so I am glad the article was updated to reflect the topic in question more accurately.
December 17th, 2008 at 1:45 pm
Eric,
Thank you for calling it to my attention. We strive to be as accurate as possible.
December 17th, 2008 at 2:19 pm
No problem at all Ms. Franklin. I know that sometimes little things aren’t always noticed, and to be honest I’ve been seeing even more egregious omissions in my local newspaper (misspellings along with factual errors). I just didn’t want people to see the article and get their hopes up thinking that they would be getting additional deductions if they are paying PMI on pre-2007 loans or if they pre-paid any of the future PMI.
July 17th, 2010 at 5:08 pm
Thank you very much for the info provided! I was looking for this info for a long time, but I wasn’t able to see a dependable source.
July 20th, 2010 at 8:52 pm
Thanks for another good article. Where else could anyone get that kind of information in such a great way of writing.