This year will be the last for homeowners to claim an important mortgage tax deduction. The 2011 tax season marks the end of the era for homeowners to write off their mortgage insurance premiums, a loss that is sure to impact many.
The Rise In Costs
As of January 1st, 2012 the mortgage insurance tax deduction, along with 58 other tax code benefits, were failed for renewal by Congress. Although they could still be retroactively implemented many of these tax benefits are expected to bring further tax debt problems among consumers, as well as directly impact the future of the housing market and those already suffering from mortgage debt.
The expiration of the mortgage insurance tax deduction, along with the increasing fees required for conventional and FHA loans, is sure to send a spike in the cost of homeownership. The worst is expected for low down payment loans, which tend to carry higher mortgage insurance premiums on the loan. The loss of deductibility of mortgage insurance is expected to significantly impact first time, or lower loan value, buyers where affordability is especially important.