How to Claim MIP on an FHA Tax Deduction

Federal Housing Administration (FHA) mortgages help people get into mortgages with minimal down payments. These mortgages do not permit the lender to charge private mortgage insurance premiums each month to protect against loss because the FHA guarantees the loans. However, the FHA imposes monthly premiums on these mortgages. For FHA mortgages taken out after 2006, the Internal Revenue Service permits taxpayers to deduct the cost of these monthly premiums from their income taxes as long as they meet the filing requirements and income restrictions.

Things You'll Need

• Form 1040
• Schedule A

Instructions

1. Compare your modified adjusted to the modified adjusted gross income limits found in IRS Publication 936. As of 2010, you cannot deduct your mortgage insurance premium payments if your modified adjusted gross income exceeds $100,000 ($50,000 if married filing separately).

2. Use form 1040 to file your income taxes and choose to itemize your income tax deductions. If you do not itemize your deductions, you cannot deduct your mortgage insurance premiums.

3. Report the amount you paid in mortgage insurance premiums for the year on line 13. Your lender should provide you with Form 1098, which shows this amount.

4. Report the total of your itemized deductions from line 29 of Schedule A on line 40. This amount will reduce the amount of income subject to federal income taxes.

References

• Internal Revenue Service: Publication 936: Home Mortgage Interest Deduction
• Internal Revenue Service: Premiums for Mortgage Insurance May Be Deductible

Resources

• Internal Revenue Service: Form 1040
• Internal Revenue Service: Schedule A