Traditionally, if you couldn’t afford a 20% down payment on a house, you had to pay private mortgage insurance, or PMI. To avoid this, many people now take out “piggyback” or second mortgages, which carry higher (but tax-deductible) interest payments. But Congress just passed a provision allowing taxpayers with adjusted gross income of $100,000 or less to fully deduct (if they itemize) the cost of private or government mortgage insurance. The mortgage insurance contract must be issued in 2007, and currently only 2007, unless they extend it. More information can be found in this MSNBC article “Homeowners’ Lucky Day”.
This is potentially good news if you’re currently trying to buy a house with less than 20% down, but doesn’t really help the people who are already paying PMI.