Homebuyers who don't put at least 20 percent down when they purchase a residence usually have to buy private mortgage insurance, or PMI, on that home loan. PMI is a policy that, as a homebuyer, you pay for, but it protects your lender in case you default.
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For most, such insurance is simply part of the price of owning a home.
But some homeowners who purchased their primary residences or second homes in 2008 can claim a tax deduction on PMI premiums.
The new tax break was tucked into the Tax Relief and Health Care Act of 2006 and originally applied to policies on home loans taken out in 2007. Almost exactly a year later, PMI-paying homeowners got more good news. At the end of 2007, the PMI deduction was extended to certain premiums paid in 2008 through 2010.
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