Home buyers in the Central Valley and Mother Lode have something new this spring to factor into their home financing calculations: A new federal tax deduction allows many qualified families to write-off premiums for private and government mortgage insurance on loans that close in 2007. Click “read more” below >>

This is the first time that homeowners who have low down payment loans with mortgage insurance will be able to deduct the cost of their mortgage insurance premiums, and the average annual tax savings for qualified families will be between $300 and $350. The new deduction is effective for the 2007 tax year.

Under the new law, private mortgage insurance (PrivateMI) premiums are now fully tax deductible for borrowers who buy or refinance a home this year if their adjusted gross income is $100,000 or less. Families with incomes of more than $100,000 and up to $109,000 will be eligible for a reduced deduction.

Private mortgage insurance premium prices vary based on the size of the down payment, type of mortgage and amount of insurance coverage. The cost of PrivateMI for a median-priced home — the projected national median price in 2007 for a single family home is $224,500 — ranges from $50 to $100 per month.

Discuss this with your tax attorney or accountant to find out if you can take advantage of this new law.