Category Archives for "Preserve"

Private Mortgage Insurance Tax Deductibility


I got an email this morning that I’ve posted below, verbatim, about the deductibility of private mortgage insurance (PMI). I haven’t done much research on this topic, so be warned: Any information below is to be taken as food-for-thought. DO YOUR OWN RESEARCH TO FIND OUT WHETHER THE INFORMATION BELOW CAN BE APPLIED TO YOUR OWN SITUATION.

Hi Bill – I’m David Wescott and I work for one of those monster PR firms that spams you relentlessly with useless stuff, but this time I have something that might actually be relevant. I wanted to make sure you (and your readers) were aware this spring marks the first time that qualified taxpayers will be able to claim a federal income tax deduction for mortgage insurance premiums.

I know most of the time bloggers write about private mortgage insurance it’s usually about how to get rid of it. But privately insured mortgages have helped more than 25 million families become homeowners. I hope you agree that PrivateMI is a much more sound option than some of those risky, exotic loans that were all too available a few years ago. About 2.6 million Americans will be eligible for this deduction.

The tax deduction for mortgage insurance enables households with an adjusted income of $100,000 or less to deduct the full cost of their government or private mortgage insurance premiums on their federal tax returns. Families with incomes between $100,000 and $109,000 are eligible for a reduced deduction. The deduction will provide an average annual savings of $350 for qualified taxpayers. There’s more information on the deduction available at http://privatemi.com/loanoptions/benefits/deductible.cfm and some background at http://www.privatemi.com/loanoptions/index.cfm.

I hope this is helpful – please let me know if you have any questions or would like to talk with an expert about PrivateMI.

Thanks for your interest!

Best,

David

Again, please do your due diligence on this information, including seeking out a professional tax adviser and/or attorney. Here are some additional links to the topic:

Bankrate.com
Mortgage News Daily

According to the Bankrate article, there are Important Caveats:

  • Caveat No. 1: The tax deduction applies only to mortgages that are closed in 2007. If you have a loan with mortgage insurance in 2006, you won’t be able to deduct the premiums in the 2007 tax year unless you refinance in 2007.
  • Caveat No. 2: There are income limits. You get the full deduction if your adjusted gross income is $100,000 or less. The amount you can deduct phases out rapidly after that, and no mortgage insurance deduction is available if you make more than $110,000.
  • Caveat No. 3: This is a one-year deal, and Congress would have to renew the deduction to make it apply for the 2008 tax year and beyond. Congress probably will extend the deduction, but you can’t know for sure.
  • Caveat No. 4: If you take the standard deduction instead of itemizing deductions, the new law makes no difference to you. “You need to have a mortgage of about $130,000 or so to even pay enough interest to hurdle the standard deduction,” says Bob Walters, chief economist for Quicken Loans. In practice, he says, this means that the deduction is available to households with incomes between $50,000 and $100,000.

Anyway, for a limited — but certainly not insignificant — number of folks, this is some good information. If you have PMI, make less than $110,000, and closed your mortgage deal in 2007, it looks like you can take the deduction.

Two for Tuesdays #9

Money Hacks
Last week, we showed how you could save $500 per year on car insurance and thousands of dollars when you purchase a car through Costco’s insurance and car buying services, respectively.

This week, we’ll talk about some frugal measures to save you some cash.

#1
Wash your own car and save $5 to $50 or more. Sure, it’s convenient to have somebody else do it, but it’s not a good use of your money. In the old days, I spent hours washing my car, drying it with the finest chamois, detailing it with premium wax, cleaning every crevice in the wheels, putting on the tire dressing, Armour Alling the interior.

Whew. Just writing about it is making me sweat!

The convenience of dropping off your car and having it worked over by a team of 12 minimum-wage earning car washers is tempting.

Don’t do it. First of all, they can never do as good a job as you can. They have no skin in the game; it’s not their car.

Second, their markup is huge. They can wash your car in 5 or 10 minutes and they charge you upwards of $20, sometimes $50 or more.

In a future post, I’ll give you some money- and time-saving tips to wash your car in less time, with little expense, and with superior results. Suffice it to say for now, that the only expenses you’ll incur are water, soap, once for a chamois or drying cloth, and a small amount for some detailing products. Buffalo Milke is my favorite line of premium car detailing products at a very reasonable price. You know it’s good when high-dollar car customizers use it unreservedly.

#2

The second tip for today is one you’ve heard of before, but with a twist. Save money by buying in small quantities. The idea here is to buy the quantity you need at the best price possible without letting the goods spoil.

Buying a case or two of shaving cream on sale is prudent. Buying 10 pounds of hamburger without a way to freeze most of it is wasteful. Unless you’re having a BBQ, in which case I hope you’ll invite me. I’d be happy to Q a few things. It’s something I really like to do and I’m darned great at it.

So the key is to buy what you need in a quantity that you won’t waste. Trust me on this one: I’ve wasted more food buying in bulk than I can remember. It never pays to save a few dollars if you waste what you bought.

Remember that side of beef your aunt bought when you were a kid? She had a giant freezer and you ate beef every time you came over. Her children grew up to be vegans. You get the picture.

That concludes this week’s Two for Tuesdays. Come back next week for 2 more money-saving tips.

Two for Tuesdays #8

Costco
Last week, we talked about what not to buy (bottled water and extended warranties). This week, we’ll talk about what to buy, both courtesy of Costco, the warehouse club.

#1

The first thing you should consider buying through Costco is auto and/or home insurance. I just saved $500 per year over Allstate. I regrettably left Allstate after nearly 25 years because I am trying to cut costs as much as possible without suffering any detrimental defects. Costco offers such insurance through Ameriprise, an American Express company.

The initial set up was very easy. Call Ameriprise at 1-888-404-5365 and mention code 8A8. You’ll need your Costco number, your vehicle VINs, Driver’s License Number, number of miles you’ll drive in a year and a few other particulars about your driving habits.

Executive members get free roadside service.

#2

Costco also offers a great car buying service. I’ve used it on my last two cars now and have been extremely pleased with the deals I got. Best of all, I didn’t have to haggle or feel like I got taken to the cleaners. Costco has relationships with virtually every vehicle manufacturer. Here’s a bonus tip on when to buy.

Buy last year’s model. Every dealer wants to rid itself of last year’s models so that they can sell this year’s models. Their Costco deals for these models are phenomenal. I’ve saved over $10,000 off list on each of my last two purchases through Costco.

That concludes this week’s Two for Tuesdays. Come back next week for another money-saving bonanza.

Two for Tuesdays #7

Last week we found out how to save some cash by enrolling in a free membership rewards dining program and by changing your furnace filters. This week, we’ll keep it short and sweet.

#1

Don’t buy bottled water. Not only is it bad for the environment (think of all the trucks transporting it as well as the oil used to make the plastic bottles), it’s bad for your pocket book. 20 years ago, I would have said your were crazy to pay for water. I still do. What’s next? Air?

Buying water at the supermarket is dumb. Buying it a ballgame is downright idiotic. It’s more expensive than gasoline, less tasty than beer, and it’s just not cool. The trend is over.

#2

Don’t buy extended warranties. Back when I was in college, I worked for Circuit City. Their ESP plans paid me 20 percent of the total price you paid to buy the insurance. That’s a hefty markup for a product you will never use. It’s very likely that the salesperson will overpromise and when it comes time to use the warranty, the service department will point you to the clearly — even if unbelievably small — wording in the terms that you never read that tells you your particular problem isn’t covered.

Plus, in today’s throwaway and rapidly changing world, in 2 or 3 years, you won’t even want that DLP Television or 3rd Generation iPod. Something with more capacity, more features, and a lower price will come out to usurp that gadget you paid too much for.

That concludes this week’s Two for Tuesdays. Stay tuned for the next installment in one short week.