Subject: IRS Response on MI Tax Deductibility
Date: Mon, 9 Jul 2007 15:13:07
From: "Vicki Vidal" vvidal@mortgagebankers.org

MBA was just informed that the Internal Revenue Service (IRS) responded to the Department of Agriculture's Rural Housing Service's (RHS) private letter requesting clarification on several issues associated with the recently passed law providing for the tax deductibility of mortgage insurance premiums paid in 2007. 

In particular, the IRS has clarified that Veterans' Affairs and RHS guarantees are considered mortgage insurance and that such "guarantee fees" (i.e., funding fees) are deductible.  The letter also recognizes that the Federal Housing Administration's upfront premium is subject to allocation for 2007, but such allocation is not required for VA and RHS funding fees.    Other issues are addressed.  Copies of RHS's and IRS's letters follow.

RHS Letter

IRS Response

Vicki Vidal
Senior Director, Government Affairs
Mortgage Bankers Association
1919 Pennsylvania Avenue, NW
Washington, DC 20006
(202)557-2861 (direct)
(202)721-0251 (fax)
vvidal@mortgagebankers.org  

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