Budget restores deduction for ’ 17 mortgage insurance

WASHINGTON — Call it buried tax treasure for homeowners: Deep inside the behemoth 654-page bipartisan budget bill recently signed into law by President Donald Trump are littlenoticed extensions of key tax- code benefits that expired in 2016, but now can be used for upcoming 2017 tax filings.

Potentially the most popular is aimed at millions of buyers and owners who pay mortgage-insurance premiums on conventional, FHA and VA loans.

Roughly 4.1 million owners took writeoffs averaging more than $ 1,500 during 2015, the most recent year for which statistics are available.

Mortgage-insurance industry officials predict that at least that many will be able to qualify for the benefit on their 2017 tax returns — provided they learn that the deduction has been revived for the year.

Mortgage insurance is designed to cover a portion or all of a lender’s risk of loss in the event of default on home loans in which borrowers make less than a 20 percent down payment.

The coverage is especially commonplace — and important — on mortgages made to first- time buyers and to households with moderate or lower incomes. Fees are either folded into borrowers’ monthly payments or paid in a lump sum up front.

Congress first authorized tax deductions for mortgage-insurance premiums more than a decade ago, but legal authority for the write- offs lapsed at the end of 2016.

The new budget bill provides for a retroactive extension for premiums paid during 2017, but it’s silent about future deductions, including for 2018.