We refinanced mortgage to an FHA loan with $5089.00 listed as Mortgage Ins. Premium to HUD. Can this entire amount be claimed as the mortgage insurance premium?

[IreneS · Accepted solution]

Not the entire amount.

According to IRS Pub. 936:  "You must allocate the premiums over the shorter of the stated term of the mortgage or 84 months, beginning with the month the insurance was obtained."

You take the total amount of the mortgage insurance and divide it by the lower of 84 or the length of the loan (30 years = 360 months; 15 years = 180 months).  In most cases, 84 is the lower number.

For example, let's say your loan is $300,000, and the upfront FHA MIP is $5,250, the amount you can take on your tax return is $62.50/month [5,250 / 84].  If you owned the house for 2 months in 2016 your deduction for mortgage insurance would be $125.