tax deduction on MIP? - Posted by Marc Lamphier

Real Estate Investing
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Posted by marc on March 06, 2000 at 12:19:20:

OK thanks, I understand now.

More general question. Can anyone recommend any tax guides that are tailored for owners of rental property?

thanks,

Marc

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tax deduction on MIP? - Posted by Marc Lamphier

Posted by Marc Lamphier on March 04, 2000 at 23:54:37:

This is a great group, I learned a lot when buying a small 4-unit apartment building recently. I went FHA and put almost nothing down. Positive cash flow from the start,and I live in one of the units essentially for free.

My question. FHA required a mortgage insurance premium up front equal to 2.25% of the loan amount, which I paid out of pocket. I also paid points of 2%. The points show up on an IRS form 1098, and are deductible on this year’s tax return. But how do I treat the MIP for tax purposes? I can find no info anywhere on this.Is MIP treated as points by IRS, and is it deductible? I’ve scoured tax guides and internet sites with no success.

thanks,

Marc

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Re: tax deduction on MIP? - Posted by TomC (Md)

Posted by TomC (Md) on March 05, 2000 at 08:48:01:

Ihave a FHA loan on a rental condo with MIP. It was non-deductable when the condo was my primary residence. Now that it is a rental, I deduct MIP as an insurance expense.

I am no tax expert, but since you occupy 25% of the prop as your primary residence, the other 75% is an investment property. I would deduct 75% of the MIP to offset the income you are showing for those 3 units.

TomC

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Re: tax deduction on MIP? - Posted by Chris

Posted by Chris on March 05, 2000 at 02:15:26:

Marc-

Head over to the IRS site and do a site search for MIP and/or Mortgage Insurance Premium and you will get hits.

See Pubs 527,530,946 which are free.

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Re: tax deduction on MIP? - Posted by Marc

Posted by Marc on March 05, 2000 at 14:06:21:

Thanks Chris. I had searched the IRS site previously without finding anything, but using these keywords I found what I was looking for. Looks like neither the initial upfront MIP nor the monthly MIP payments are deductible.

-Marc

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Re: tax deduction on MIP? - Posted by Mark (SDCA)

Posted by Mark (SDCA) on March 06, 2000 at 12:12:28:

Not true. It IS tax deductible. Exactly as TomC said. The 25% that represents your personal residence is NOT deductible. The other 75% that represents the rental portion of the building IS tax deductible. Same with the upfront PMI payment.

Mark