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Subject Author Date
Mortgage Insurance as Rental Expense DORFMONT@aol.com (Linda Dorfmo 01-13-2007
Posted by DORFMONT@aol.com (Linda Dorfmo on January 13, 2007, 2:12 am
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 My client has a single family rental house which she has
been renting out for many years. When she first got her
mortgage she was charged private mortgage insurance because
her down payment was not 20%. I have been deducting this
insurance premium on her Sch. E. I recently got into a
discussion with a mortgage broker friend who says that this
premium is not deductible. After scouring the IRS sites and
the publication on rental property I have found that PMI is
not added to basis and is not amortized over the term of the
loan, but nowhere did I find it either permitted or
prohibited as a deduction as paid. Who is right?

Linda Dorfmont E.A., CFP, CSA

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Posted by Harlan Lunsford on January 15, 2007, 1:47 am
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 DORFMONT@aol.com (Linda Dorfmont) wrote:

> My client has a single family rental house which she has
> been renting out for many years. When she first got her
> mortgage she was charged private mortgage insurance because
> her down payment was not 20%. I have been deducting this
> insurance premium on her Sch. E. I recently got into a
> discussion with a mortgage broker friend who says that this
> premium is not deductible. After scouring the IRS sites and
> the publication on rental property I have found that PMI is
> not added to basis and is not amortized over the term of the
> loan, but nowhere did I find it either permitted or
> prohibited as a deduction as paid. Who is right?

You are.

the mortgage broker was thinking only in terms of personal
deductions on schedule a and didn't consider deductibility
of ordinary and necessary rental expenses.

ChEAr$,
Harlan Lunsford, EA n LA

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Stuart A. Bronstein on January 15, 2007, 1:48 am
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> My client has a single family rental house which she has
> been renting out for many years. When she first got her
> mortgage she was charged private mortgage insurance because
> her down payment was not 20%. I have been deducting this
> insurance premium on her Sch. E. I recently got into a
> discussion with a mortgage broker friend who says that this
> premium is not deductible. After scouring the IRS sites and
> the publication on rental property I have found that PMI is
> not added to basis and is not amortized over the term of the
> loan, but nowhere did I find it either permitted or
> prohibited as a deduction as paid. Who is right?

It's not deductible as an interest expense, because it's not
interest. But I suppose it could be deductible as an
ordinary and necessary business expense.

Stu

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Arthur Kamlet on January 15, 2007, 2:07 am
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> My client has a single family rental house which she has
> been renting out for many years. When she first got her
> mortgage she was charged private mortgage insurance because
> her down payment was not 20%. I have been deducting this
> insurance premium on her Sch. E. I recently got into a
> discussion with a mortgage broker friend who says that this
> premium is not deductible. After scouring the IRS sites and
> the publication on rental property I have found that PMI is
> not added to basis and is not amortized over the term of the
> loan, but nowhere did I find it either permitted or
> prohibited as a deduction as paid. Who is right?

Not a deduction for 2006 or earlier.

For new loans with a PMI in 2007, and it expires in a year
or two, PMI will be allowed as a mortgage deduction.

--
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Harlan Lunsford on January 16, 2007, 3:34 am
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Arthur Kamlet wrote:

>> My client has a single family rental house which she has
>> been renting out for many years. When she first got her
>> mortgage she was charged private mortgage insurance because
>> her down payment was not 20%. I have been deducting this
>> insurance premium on her Sch. E. I recently got into a
>> discussion with a mortgage broker friend who says that this
>> premium is not deductible. After scouring the IRS sites and
>> the publication on rental property I have found that PMI is
>> not added to basis and is not amortized over the term of the
>> loan, but nowhere did I find it either permitted or
>> prohibited as a deduction as paid. Who is right?

> Not a deduction for 2006 or earlier.
>
> For new loans with a PMI in 2007, and it expires in a year
> or two, PMI will be allowed as a mortgage deduction.

It's rental property, Art.

ChEAr$,
Harlan Lunsford, EA n LA

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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