jtfcpa Posted February 23, 2008 Report Posted February 23, 2008 Taxpayers bought a home in 2007 via FHA. At settlemetn they paid a FHA PMI upfront charge of $3,300. On the mortgage statement, only the monthly premium was reproted of $178. Is the upfront charge reflected ont he settlement sheet deductable as PMI in 2007? If so, how do you deal with the difference with the 1098? Since the taxpayers bought the home in late 2007, this amount is the difference between them itemizing or taking the standard deduction. Thank you. Quote
Eli Posted February 23, 2008 Report Posted February 23, 2008 Taxpayers bought a home in 2007 via FHA. At settlemetn they paid a FHA PMI upfront charge of $3,300. On the mortgage statement, only the monthly premium was reproted of $178. Is the upfront charge reflected ont he settlement sheet deductable as PMI in 2007? If so, how do you deal with the difference with the 1098? Since the taxpayers bought the home in late 2007, this amount is the difference between them itemizing or taking the standard deduction. Thank you. Yes, you can take the deduction, according to Pub 936 Pg 7 http://www.irs.gov/pub/irs-pdf/p936.pdf Eli Quote
catax Posted February 24, 2008 Report Posted February 24, 2008 Yes, you can take the deduction, according to Pub 936 Pg 7 http://www.irs.gov/pub/irs-pdf/p936.pdf Eli I see this differently. Unless I am misunderstanding the facts. I had the same situation and researched this. Only the charge allocable to the period $178 per month is deductable. So extend this out by the quantity of months they paid payments. The balance of the $3300 is allocable to another period. Page 7 in addressed by Eli discusses this. Since the PMI deduction has been extended to 2010 they should be able to use up all the prepayment in another year. Hope this helps. Nena Quote
catax Posted February 24, 2008 Report Posted February 24, 2008 Another thought I don't know what "FMA" means. Is that Department of Veterans affairs or Rural Housing Service listed in the pub. If so then my previous answer is incorrect. Nena Quote
jtfcpa Posted February 24, 2008 Author Report Posted February 24, 2008 Thanks- I found another analysis that indicated that the upfront costs paid are amortized over the length of the mortage. Therefore, I would be entitled to deduct 1/360 a month for 30 years. Similar to points on refinancing. Quote
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