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slowly get the tax benefit of having made the upfront interest payment.
What about home mortgage insurance?
Since 2007, homeowners have been allowed to deduct what they have to pay for mortgage insurance as if it were mortgage interest. This provision applies to mortgages where the associated insurance policy was obtained in 2007 or later.
The problem, though, is that this provision is one of many that Congress has to renew annually. As of mid-December, lawmakers hadn't yet completed its annual exercise of extending the expiration date of the provision. If the measure isn't extended, then mortgage insurance premiums paid in 2015 won't be deductible. Few people expect problems in renewing the provision, but it does have a cost to the federal government and
could be a target among budget-conscious lawmakers.
Homeowners: get all your tax breaks
Finally, it's important to understand that homeowners are also eligible for other deductions. Property taxes for real estate are generally deductible, and credits for various expenses on improvements related to energy efficiency are available. Depending on your tax situation, the total amount of tax breaks you can qualify for can be large enough to sway you toward home ownership.
Owning a home brings with it a lot of tax issues to keep in mind. The deductibility of mortgage interest is a huge incentive that spurs many buyers to make their home purchases, and despite some threats to limit or repeal the mortgage interest deduction, it's unlikely to happen in the near future without some sort of large-scale tax reform effort that changes the broader set of tax laws dramatically.
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By Dan Caplinger
Posted on Motley Fool