How to Determine The Amount of PMI You Paid

• If you took out a home loan during the tax year and paid PMI, your lender should have provided you with Form 1098 that shows the PMI premiums you paid. This can include a lump-sum, as well as any monthly premiums paid during the year. If you didn’t receive a Form 1098 from your lender, the amounts you paid for PMI can be found on your final loan closing statement, HUD-1, that your escrow company sent you at closing. You also should check your monthly loan statements that will show any mortgage insurance premiums you paid.
  
  

Where to Deduct PMI

• PMI is considered an interest expense by the IRS, and a separate line for this deduction is shown in the interest expense section on Line 13 of Schedule A. This is the form you use to itemize your deductions. If you don’t have enough other expenses to itemize your deductions, you won’t be able to deduct PMI. The instructions for Schedule A include an explanation of the amount of PMI you can deduct on Line 13.
  
  

Limitations on the PMI Deduction

• In order to deduct PMI, you must first be able to itemize your deductions. Itemized deductions include things like your property taxes, charitable donations and home mortgage interest. If the total of all your itemized deductions, including PMI, don’t exceed your standard deduction, which for 2011 is $11,600 for married couples and $5,800 for single taxpayers, you can’t itemize. The deduction for PMI also is limited by your adjusted gross income, which is shown on Line 37 of the first page of your return. For married couples, if your adjusted gross income is higher than $100,000, your deduction for PMI will be gradually reduced, For single filers, this threshold is $50,000.
  
  

Considerations

• In a year when you take out a home loan, you should review all your paperwork to see if PMI was included in your costs. Be sure to give you tax preparer a copy of your certified, final closing statement (HUD-1) and any Form 1098 your lender may have sent you, as well as a copy of your year-end loan statement. Deducting PMI can result in substantial tax savings.