| Before Congress went on recess for the holidays, it | | | | December 31 are also qualified for this tax deduction in |
| passed a new tax break for middle-income taxpayers | | | | so far as the amount being refinanced exceeds not |
| who plan to purchase a home in 2007. The tax break, | | | | the amount of the original loan, states Jeff Lubar, of |
| neatly sandwiched in an omnibus tax bill, allow new | | | | Mortgage Insurance Companies of America. |
| homeowners to claim a deduction on their mortgage | | | | Tax deduction on mortgage increase was not the only |
| insurance premiums. | | | | tax break that Congress enacted before taking a |
| Many home buyers cannot afford to make an initial | | | | holiday recess. |
| down-payment of 20% of their home value and are | | | | Teacher's classroom expenses tax deduction was |
| thus subject to paying home owners mortgage | | | | extended allowing teachers and others in the |
| insurance, an insurance designed to protect banks | | | | education arena to deduction up to $250 in classroom |
| from home owners that may default on their | | | | expenses that they purchase with their personal cash. |
| payments. Mortgage insurance is estimated to be | | | | The CCH reports that over 3 million taxpayers claimed |
| about $75.00 a month on a $180,000 home, or just | | | | the deduction in 2005. |
| about 1% of the mortgage. | | | | Deduction for state and local taxes, which expired in |
| The Mortgage Insurance Companies of America, a | | | | 2005, was resuscitated until 2007. This gives |
| trade group for private mortgage insurers, estimates | | | | taxpayers the option to deduct sales taxes instead of |
| that the tax deduction will save homeowners | | | | state income taxes on their federal returns. This, |
| approximately $300 to $500 a year on taxes. There | | | | however, is more frequently used by taxpayers in |
| are some caveats, however: | | | | states with no income tax. |
| For one, the deductions will expire at the end of 2007 | | | | With tuition cost rising higher than inflation, it was indeed |
| unless congress is pressured to extend it, which is | | | | good news for many students for Congress to extend |
| very likely. In addition, only homeowners with adjusted | | | | a deduction of up to $4000 for college tuition, books |
| gross income of $100,000 (middle-income taxpayers) | | | | and related cost. To qualify for the full tax deduction |
| or less qualifies for the deduction. Moreover, if you are | | | | single taxpayers must have an adjusted gross income |
| paying homeowners insurance on an existing home | | | | of up to $65,000 and married couples with an adjusted |
| you probably will not qualify for the tax deduction. It | | | | gross income of $130,000 or less. Single taxpayers |
| remains available explicitly for new home mortgages | | | | with an adjusted gross income of $80,000 or less and |
| issues after December 31. | | | | married taxpayers with an adjusted gross income up |
| Home owners who refinanced their mortgages after | | | | to $160,000 can deduct up to $2000. |