Can I deduct PMI in 2019?

October, 10 2019 by Chris Rubino, EA

PMI stands for Private Mortgage Insurance. This term does not appear in the tax code, and indeed other types of mortgage insurance premiums were qualified to be deducted, in addition to PMI. The chief qualifier was whether the premiums paid for the insurance were a percentage of the amount borrowed; if the premium amounts paid were a percentage, then the PMI could be treated as home mortgage interest and deducted on the Schedule A if the taxpayer itemized deductions. This deduction started to phase out for adjusted gross incomes $100,000 or higher, and it was completely gone for incomes above $109,000.

Unfortunately, this deduction in the tax code was not permanent and Congress put an expiration date on it. This expiration date was extended twice, eventually to December 31, 2017, and any PMI paid after that date is not deductible.

In March of 2019, Senator Chuck Grassley (R-IA) introduced a tax extenders bill (extending not only this provision but a number of others that either expired or were going to expire), but this bill did not pass out of the Senate. Prior to that, a House bill had been introduced removing the expiration date entirely and therefore making this provision a permanent part of the tax code, but that bill did not pass out of committee. So there have been some legislative efforts made to make PMI deductible again, but none have borne fruit.

If you find yourself paying PMI in 2019 you may want to check your current mortgage balance, the current market value of your home, and your loan terms. Most loans have PMI because the loan-to-value ratio was more than 80% at the time the loan was incurred. Said another way, your equity in the home was less than 20% of the value. If your equity increases to where it is more than 20%, many lenders may be willing to cancel the PMI. If they are not willing to cancel the PMI, you may want to consider refinancing. This is a non-tax suggestion, and your situation and loan terms may vary, so check with your lender to learn about your options. We also suggest you be proactive, as many lenders will not notify you when it is no longer necessary to pay PMI.

As of the date of this posting, the answer to the question is no – PMI is not deductible. But if you are paying PMI, keep an eye on tax legislation, as it is possible that the deduction will be back one of these days.