Before adjourning for the year, Congress passed a $45 billion tax bill that includes a deduction for mortgage insurance premiums for the benefit of low- and moderate-income homebuyers in 2007.The MI deduction is limited to homebuyers with incomes of less than $110,000. First-time homebuyers are expected to benefit the most from the deduction, but it is not limited to first-time buyers. Passage of the tax deduction is a major victory for the Mortgage Insurance Companies of America, which has been lobbying for this provision for several years. "We are pleased that policymakers have recognized mortgage insurance as a cost of finance just like mortgage interest," said MICA executive vice president Suzanne Hutchinson. The MI deduction will help families that cannot afford a 20% downpayment on conventional conforming loans as well as homebuyers using low-downpayment financing guaranteed by the Federal Housing Administration and the Department of Veterans Affairs. The tax deduction is limited to the 2007 tax year and is expected to cost the government $91 million in lost revenues. Congress will have to pass an MI deduction next year so homebuyers can use the deduction in 2008.
