New 2007 Tax Break For Some Homeowners
Until recent times, most home buyers putting less than 20% down would opt for a piggyback loan (a 2nd), instead of Private Mortgage Insurance (PMI) and just one loan. Since the prime rate on Piggyback loans have risen in the last year and there is still uncertainty as to where the will end up, home buyers have been taking a second look at taking out just one loan, and the PMI that goes along with that when putting less than 20% down. In the interest of having predictable loan costs home buyers have surely been altering the way they structure their loan. The PMI industry has already seen an 8.5% increase in the use of mortgage insurance with purchases and refinances since the beginning of the 1st quarter of 2007.
Other than the fluctuating cost of a piggyback loan, what is driving people now to use PMI? Well finally for 2007 there is a new tax break for a home purchase THIS YEAR. I'll cut to the chase. If you bought a home this year, and you used PMI, and your adjusted gross income is LESS than $100,000, then you can write off the full premium of the PMI! So you now get the Interest deduction on the 1st mortgage, the property taxes, and now PMI! Homeownership is great!
Bad news is, if your adjusted gross income is over 110,000, your out of luck on this new tax break (at least for this year). There is a partial deduction you can take if you make between 101,000-109,000, but it goes down 10% per thousand!
This is something that should have been implemented long ago - but who cared as prices were sky rocketing and everyone made money hand over fist buying and selling property.Lets just hope they increase the limit over $100,000, which will enable people who live in more expensive areas, such as California to qualify for this tax break too. After all, it takes much more income to simply own a home in an area like Calfifornia.
If I can advise you on your next home purchase, or sale, don't hesitate to contact me.
Robert Mickalson, Realtor
661-373-2374 / robert@thescvagent.com