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