Recently introduced legislation, currently under review by the House Committee on Ways and Means, proposes amendments to the Internal Revenue Code of 1986. The goal of this bill is to enhance the income cap for mortgage insurance premium deductions and to make this deduction a permanent feature of the tax code.

Addressing the Need for Tax Relief

As housing costs surge across Florida and the rest of the United States, Representative Vern Buchanan, vice chair of the Ways and Means Committee, emphasized the urgency of providing tax relief. “With housing prices skyrocketing in Florida and across the country, it’s our responsibility to provide tax relief for middle-class families seeking to own a home,” he stated. This bipartisan initiative aims to offer millions of Americans a better chance at realizing the American dream of home ownership.

Supporting Working Families

Co-sponsor Jimmy Panetta (D-Calif) highlighted the struggles many families face due to the expenses associated with mortgage insurance. “The costs of mortgage insurance can make buying a home that much more difficult for working families,” Panetta remarked. The proposed legislation aims to ensure that the mortgage insurance premium deduction is not only permanent but also updated to cater to more middle-class homeowners.

Advocacy from Industry Leaders

The Mortgage Bankers Association (MBA) has actively promoted efforts to decrease mortgage insurance premiums, particularly those tied to Federal Housing Administration (FHA) loans. In this context, Bob Broeksmit, MBA’s president and CEO, discussed the expected benefits of the new administration’s deregulatory approach, which could diminish costs in the mortgage origination process. He noted, “Over the next months and years of this administration, we expect an easing of the regulatory burden.”

Broeksmit called for immediate action to lower mortgage insurance premiums for both single-family and multifamily FHA loans, stating that such measures could quickly realize the administration’s commitment to improving housing affordability.

Legislative Impact on Homeowners

Seth Appleton, president of U.S. Mortgage Insurers (USMI), expressed strong support for the legislation known as H.R. 2760. He referred to the bill as “common-sense legislation that would restore, make permanent, and expand eligibility for the tax deduction for mortgage insurance premiums.”

Statistics reflect the significance of this deduction: From 2007 until its expiration in 2021, the mortgage interest premium deduction was claimed 44.5 million times, accumulating $64.7 billion in deductions for American homeowners—averaging $1,454 annually per qualifying taxpayer. Appleton remarked that “the expiration has deprived millions of low- and moderate-income taxpayers” from benefiting in recent years, emphasizing that reinstating this deduction is a crucial step towards making homeownership more attainable for American families.