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Level 1

Is the VA Funding Fee deductible for 2017? If so, where does it get posted?

 
12 Replies
Level 6

Is the VA Funding Fee deductible for 2017? If so, where does it get posted?

Mortgage insurance, including the VA funding fee, is not deductible on 2017 taxes. 

This, from IRS Publication 936, Home Mortgage Interest Deduction:

Amounts charged for services. Amounts charged by the lender for specific services connected to the loan aren't interest. Examples of these charges are: Appraisal fees, Department of Veteran’s Affairs (VA) funding fees, Mortgage Insurance Premiums, Notary fees, and Preparation costs for the mortgage note or deed of trust. You can't deduct these amounts as points either in the year paid or over the life of the mortgage.

Level 1

Is the VA Funding Fee deductible for 2017? If so, where does it get posted?

The reference says that it is not deductible "as points" which is still consistent with previous threads that say you can still deduct it as mortgage insurance.
Level 6

Is the VA Funding Fee deductible for 2017? If so, where does it get posted?

We're still waiting...
Level 1

Is the VA Funding Fee deductible for 2017? If so, where does it get posted?

it expired at the end of 2016. My question is whether it was restored in the new tax bill
Level 1

Is the VA Funding Fee deductible for 2017? If so, where does it get posted?

I just found this on the Turbo tax blog.  <a rel="nofollow" target="_blank" href="https://blog.turbotax.intuit.com/tax-reform/government-shutdown-averted-and-tax-provisions-providing...>
Level 1

Is the VA Funding Fee deductible for 2017? If so, where does it get posted?

So, where do we post the va funding fee? I updated my software and i still don't see it.
Level 1

Is the VA Funding Fee deductible for 2017? If so, where does it get posted?

Here's some additional information but we need Turbo Tax to provide guidance on how to enter the Mortgage Interest Premium and the VA Funding Fee when filing with certain tax relief extenders that were signed into law last Friday.

Bottom line up front: The Bipartisan Budget Act of 2018 passed last week. Included in it were provisions extending certain tax reliefs, including the Mortgage Insurance Premium, noted on the Intuit Turbo Tax FAQ page here -- https://ttlc.intuit.com/questions/4241639-tax-relief-the-bipartisan-budget-act-of-2018

The legislative text as signed into law can be found here: https://www.scribd.com/document/xxxxxxxxx/Bipartisan-Budget-Act-of-2018#download&from_embed

Section extending Mortgage Insurance Premium relief through 2017 here:
SEC. 40202. EXTENSION OF MORTGAGE INSURANCE PREMIUMS TREATED AS QUALIFIED RESIDENCE INTEREST.

(a) IN GENERAL.—Subclause (I) of section 163(h)(3)(E)(iv) is amended by striking ‘‘December 31,
16 2016’’ and inserting ‘‘December 31, 2017’’.
(b) EFFECTIVE DATE.—The amendment made by this section shall apply to amounts paid or accrued after December 31, 2016.

This Section amends the Internal Revenue Code (current law prior to Friday). Below is the section it amends by changing the expiration date and can be found here -- https://www.law.cornell.edu/uscode/text/26/163

(E) Mortgage insurance premiums treated as interest
(i) In general
Premiums paid or accrued for qualified mortgage insurance by a taxpayer during the taxable year in connection with acquisition indebtedness with respect to a qualified residence of the taxpayer shall be treated for purposes of this section as interest which is qualified residence interest.

(ii) Phaseout
The amount otherwise treated as interest under clause (i) shall be reduced (but not below zero) by 10 percent of such amount for each $1,000 ($500 in the case of a married individual filing a separate return) (or fraction thereof) that the taxpayer’s adjusted gross income for the taxable year exceeds $100,000 ($50,000 in the case of a married individual filing a separate return).

(iii) Limitation
Clause (i) shall not apply with respect to any mortgage insurance contracts issued before January 1, 2007.

(iv) Termination Clause (i) shall not apply to amounts—

(I) paid or accrued after December 31, 2016, or

(II) properly allocable to any period after such date.


The Internal Revenue Code defines "qualified mortgage insurance" in subsection (E)(i) as "(i)mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, or the Rural Housing Service"  According to other Intuit Turbo Tax FAQ posts, the VA Funding Fee is considered mortgage insurance for tax purposes.

There's the leg work! Turbo Tax, please let us know how to account for this on the website or if you need to update the website to also include the other important extenders that were signed into law.
Level 6

Is the VA Funding Fee deductible for 2017? If so, where does it get posted?

See this article, posted by Turbo Tax AFTER the bill was signed into law:

Intuit Extender Article

Level 1

Is the VA Funding Fee deductible for 2017? If so, where does it get posted?

So can we enter the funding fee as "points" in Turbo Tax or no?