Mortgage Insurance Premiems

[bekzm]

2007 new law says we can deduct the morgage insurance premiums but what about client refinanced her house and there is mortgage insurance premiums? I thought I read if refinance - could not take it but cannot find it again. Anyone know the right answer.
Thanks

[Jesse]

I don't have an answer, but I do have more questions so this can bump your question back to top.

The rules state the insurance must be in connection with home acquisition debt and the insurance contract must have been issued after 2006, and paid B4 2008.

Pub 936 states any secured debt you use to refinance home acquisition debt is treated as home acquistion debt, but only up to the amount of the balance of the old mortgage principal just before refinancing.

So could a refi qualify? If so would you prorate PMI if more money is taken for home equity?

[solomon]

From Notice 2008-15:

Section 163(h)(3)(B) defines acquisition indebtedness as any
indebtedness that is incurred in acquiring, constructing, or substantially improving
any qualified residence of the taxpayer and is secured by such residence.
Acquisition indebtedness includes indebtedness secured by the residence
resulting from the refinancing of indebtedness meeting the requirements of the
preceding sentence (or this sentence); but only to the extent the amount of the
indebtedness resulting from the refinancing does not exceed the amount of the
refinanced indebtedness.