IRS Finalizes Regs for Reporting Mortgage Insurance Premiums for 2013.
(Parker Tax Publishing December 03, 2013)

The IRS has issued final regulations requiring information reporting on Form 1098, Mortgage Interest Statement, by persons who receive mortgage insurance premiums, including prepaid premiums, aggregating $600 or more during any calendar year. T.D. 9642 (11/27/13).

Under Code Sec. 163(h)(3)(E), premiums paid for qualified mortgage insurance by a taxpayer during the tax year in connection with acquisition indebtedness for a qualified residence are treated as qualified residence interest. Before being amended in 2013, this provision was effective only for amounts paid or accrued between January 1, 2007, and December 31, 2011, on mortgage insurance contracts issued on or after January 1, 2007. The American Taxpayer Relief Act of 2012 (ATRA), enacted on January 2, 2013, retroactively applied the tax treatment of qualified mortgage insurance premiums as qualified residence interest for 2012, and it extended that treatment to premiums paid or accrued on or before December 31, 2013, on mortgage insurance contracts issued on or after January 1, 2007. Unless extended or made permanent by further legislation, Code Sec. 163(h)(3)(E) does not apply to amounts paid or accrued after 2013.

In November, the IRS issued final regulations under Code Sec. 6050H, which provides for information reporting for mortgage insurance premiums received on or after January 1, 2013, and during periods to which Code Sec. 163(h)(3)(E) applies. However, there were no final or temporary regulations requiring information reporting with respect to qualified mortgage insurance premiums paid or accrued during 2012. Therefore, information reporting with respect to qualified mortgage insurance premiums was not required for premiums paid or accrued during 2012. Further, the fact that an individual did not receive a Form 1098 reporting the amount of mortgage insurance premiums paid for 2012 does not affect whether the individual satisfied the requirements under Code Sec. 163(h) to treat qualified mortgage insurance premiums as qualified residence interest.

Compliance Tip: Any individual who paid or accrued qualified mortgage insurance premiums in the calendar year ending December 31, 2012, or properly allocated these premiums to the calendar year ending December 31, 2012, on mortgage insurance contracts issued on or after January 1, 2007, and who did not previously treat those amounts as qualified residence interest, may be eligible for a refund if, within the applicable statute of limitations period, a Form 1040X, Amended U.S. Individual Income Tax Return, is filed based on the treatment of those amounts as qualified residence interest.

For a discussion of the treatment of mortgage insurance premiums as qualified residence interest, see Parker Tax ¶83,515.(Staff Editor Parker Tax Publishing)

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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