Uncle SamSo I started doing my taxes this week and, while going through the motions, I stumbled across something that drove me bonkers last year.

I’m in shock that I didn’t blog about it then. Perhaps I did, but I couldn’t find any mention of it…

And, honestly, I wasn’t going to blog about it this year either until reader Doug Hill posted a comment on one of my better entries regarding my PMI battle with Countrywide — the one I eventually gave up on.

See, last year there was a “new” deduction that homeowners could take. You could deduct your PMI!

How about that?

I was pretty pumped — until TurboTax told me that I didn’t qualify for the deduction.

It didn’t indicate why, so I just assumed that it was because I was too awesome, um, that it was because my income was too high. You know, something positive.

But this year, the same thing happened and I made a lot less. For a minute or so, I got all excited when it allowed me to enter that I’d paid $1021.80 for PMI in 2008, you know, thinking that I’d get most of it back from Uncle Sam.

No dice. I don’t qualify. Still.

So, modified slightly, here’s what Doug Hill said to get me all fired up:

Only those that took out a loan after 1-1-07 can deduct the cost of PMI through 12-31-10.

I took my loan out in August 2005…

Look up P.L. 110-142. Newest version of section 3 (b) doesn’t say anything about when you took out a loan; but IRS Code Section 163 Section H (iii) says the loan must be after 1-1-07.

Now we have two classes of homeowners who pay PMI — Deductible and Non-Deductible.

He’s right.

Like Doug, I’m getting hosed because I bought my house before the market started to falter. As MoneyMateKate so eloquently stated in another post, “No good fiscally responsible deed goes unpunished these days. Grrr.

Grr is right.

Once again, it feels like I’m getting the shaft for making a wise move and paying my mortgage bill on time and in full for all of these years… while the people who are walking away from their mortgages because they bit off more than they could chew could potentially be “bailed” out…by the taxes I’m paying.

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5 COMMENTS

  1. I requested PMI deletion from Countrywide last week and got my request for $130 today. I was shocked and appalled. I’m not going to let someone come in and take pictures of the interior of my home on principle. It’s just a ploy to get $130, because according to the docs the Federal Reserve published about this, it all depends on the ORIGINAL value of the home!!! They already know the original value of my home!! The same Fed Reserve doc says it has to be cancelled automatically at 78% current balance/original balance. So I’m going to pay the extra $1000 or so to get my principal that low and then they better delete it. The local Federal Reserve agencies are supposed to enforce the Homeowner’s Protection Act, so if they don’t delete it like they are supposed to, they can expect to get reported. My hatred for Countrywide continues to grow. Once I’m over one thing, a new one comes along.

  2. Jen,

    The 78% auto cancellation is based on the ORIGINAL amortization schedule.

    As for me, I finally bit the bullet after almost a year of hesitation. A realtor (mind you, not appraiser) came by to take one picture of my living room and one of the back of the house. In and out in under two minutes. The realtor informed me that the pictures are only meant to prove that the house hasn’t been trashed. Brainy, you might have a tough time with this one and the state of your living room… 🙂 Anyhow, I just called countrywide to inquire as to the status of my pmi removal. Guess what happened? They low balled the heck out of me. Bout 7% below Zillow (which is already considerably low for my neighborhood). Anyhow, not surprised, I asked the representative from the PMI department if I would be required to get another COV once I was again below the 80% mark of the new “value”. He explained (hope it’s true – fingers crossed) that I would be receiving paperwork explaining why PMI wouldn’t be dropped at this time but that there would be an option towards the end to pay down principle to match their new value. I’m anxiously awaiting the letter. Hoping what I was told turns out to be true. Hope this helps inform at least somebody…

    Dustin

  3. Woohoo! I sent my certified funds (for principle reduction) to BofA exactly two weeks ago today and checked my account this morning. Guess what – they removed PMI as of May 21st and additionally performed an escrow analysis to adjust my monthly payment. It really feels good to finally (it’s actually only been 18 months, but it feels like a lifetime) be DONE with PMI and know that I will never again pay for something so ridiculous.

    I’m sure few, if any, people will ever read this, but in a weird way it has kept me accountable and motivated to kick PMI to the curb – so thanks!

    Dustin

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