Is PMI Tax Deductible?

What Is PMI?

PMI protects the lender when a borrower defaults on a loan. If you made a down payment of less than 20% when you financed your home, you may be paying for PMI along with your regular mortgage payment.

PMI costs can vary depending on the size of your loan, the type of loan you have and your debt-to-income ratio. Typical costs are one-half point (0.5% of the total loan amount) to more than two points (2% of the total loan amount) per year.

Example: On a $250,000 loan, PMI could cost roughly $1,250 to $5,000 annually, assuming a range of around 0.5% to 2% of the loan amount.

Learn more: How Your Down Payment Affects Your Mortgage

Is PMI Tax Deductible?

No, PMI is no longer tax deductible. PMI was deductible from 2018 to 2021 if you itemized deductions on your tax return. However, any PMI paid during the 2022 tax year and after is not deductible on your federal taxes.

Can I File an Amended Return to Claim the Deduction?

Yes, you can file an amended return to claim the deduction for PMI. However, the deadline for doing so is fast approaching or may have passed. To claim a refund, you must file an amended return within three years after the date you filed your original return.

For the 2021 tax year, the filing deadline was April 18, 2022, with an extension deadline of October 17, 2022. An amended 2021 return would need to be filed by April 18, 2025, or the 2025 date you filed an extended return (no later than October 17, 2025).

How Much Does the Deduction Save?

You can estimate the deduction amount by multiplying the amount of PMI you paid in a year by your tax bracket percentage. The amount of PMI you paid is shown on Form 1098 (Mortgage Interest Statement) from your lender.

Example: If you paid $5,000 in PMI and you're in the 24% tax bracket, you would save about $1,200 ($5,000 x 0.24 = $1,200).

PMI Tax Deduction Requirements

Here are the requirements if you want to claim the PMI deduction on a 2021 amended return.

• Use Form 1040-X to file an amended return. File your amended return within three years of the date you filed your original return, or within two years of the date you paid your taxes, whichever is later.
• You must itemize your deductions. If you claimed the standard deduction on your original return, be prepared to list and document your deductible expenses.
• Your loan must qualify as home acquisition debt. To qualify, the loan that's being insured must be used to buy, build or substantially improve your home or second home. Your mortgage must be secured by the home and have originated after October 13, 1987. A refinanced loan may also qualify, but only up to the final balance on your original mortgage.
• Your PMI contract must have originated in 2007 or later. If you entered into a contract to pay PMI prior to 2007, you aren't eligible for the deduction.

Also be aware that income limits apply to qualify for the PMI deduction. The deduction starts phasing out if your adjusted gross income (AGI) is more than $100,000 ($50,000 if you're married filing separately). If your AGI was more than $109,000 ($54,000 if married filing separately) in 2021, you may not deduct PMI.

Learn more: Standard vs. Itemized Deductions: Which Saves You Money?

Frequently Asked Questions

The Bottom Line

Although you can't deduct PMI on your tax return, you may someday eliminate it from your monthly mortgage payment by making on-time payments until it expires, paying your mortgage off faster, boosting your home's value or getting an appraisal that shows your equity has increased. It takes time and (sometimes) effort, but saying goodbye to PMI could be sweeter—and save you even more money—than using it as a tax deduction.