L.S. Posted February 18, 2011 Report Share Posted February 18, 2011 Can client deduct their prepaid mortgage insurance on a 30 year FHA refinance? They got the 1098, but it did not include the mortgage insurance amount. Quote Link to comment Share on other sites More sharing options...
GERALD Posted February 18, 2011 Report Share Posted February 18, 2011 Prepaid motgage insurance must be amortized over 84 months, or the length of the mortgage whichever is shorter. There are also restrictions if the refinanced principle is greater than the principle before refinancing. Quote Link to comment Share on other sites More sharing options...
Pacun Posted February 18, 2011 Report Share Posted February 18, 2011 Prepaid motgage insurance must be amortized over 84 months, or the length of the mortgage whichever is shorter. There are also restrictions if the refinanced principle is greater than the principle before refinancing. I understand that you get 1/7 of the amount paid if the loan is for 7 or more years. What do you do? Do you enter an asset so you don't forget next year? Quote Link to comment Share on other sites More sharing options...
GERALD Posted February 19, 2011 Report Share Posted February 19, 2011 No, I just have a note on the front of their permanent file folder. I think you could make the asset way work, but I don't like to clutter up returns. Quote Link to comment Share on other sites More sharing options...
Pacun Posted February 19, 2011 Report Share Posted February 19, 2011 No, I just have a note on the front of their permanent file folder. I think you could make the asset way work, but I don't like to clutter up returns. I tried to enter an asset and selected amortization but it goes to Sch A line 23 affected by the 2% floor. How Do I know if the insurance was prepaid for other years when I ONLY see form 1098? Also how do I know if the insurance is from the dept of VA or Rural Housing Service? "The allocation rules, [amortization] explained above, do not apply to qualified mortgage insurance provided by the Department of Veterans Affairs or the Rural Housing Service (or their successor organizations)." Quote Link to comment Share on other sites More sharing options...
clay Posted February 19, 2011 Report Share Posted February 19, 2011 I had a client who refinanced last year and the mortgage was subsequently sold to 2 other banks. 1098 from each bank had MIPS. Client called the bank where the loan originated and was told the amount paid was not a prepayment, but a cost of getting the mortgage. The other 2 1098's also had MIPS, but a much smaller amount because they were only with the banks for a few months. If it is not a prepayment, take the amount shown on the 1098. Quote Link to comment Share on other sites More sharing options...
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