The final regulations [PDF 205 KB] implement reporting requirements that result from the extension of the treatment of mortgage insurance premiums made by the American Taxpayer Relief Act of 2012 (enacted in early January 2013).
The final regulations are effective on Wednesday, November 27, 2013—the date when they will be published in the Federal Register.
Temporary regulations and proposed regulations issued in May 2009 provided guidance on how to allocate certain prepaid qualified mortgage insurance premiums in order to determine the amount of the prepaid premium that is to be treated as qualified residence interest (and therefore potentially deductible by individual taxpayers).
The temporary regulations also add a new provision to the regulations under section 6050H to provide that a reporting entity that receives mortgage insurance premiums of $600 or more from an individual taxpayer during a calendar year must make an information return setting forth the total amount received from that individual during the calendar year.
The part of the proposed regulations relating to the allocation of prepaid qualified mortgage insurance premiums was adopted as final regulations in May 2012; however, those final regulations did not finalize the proposed regulations relating to the reporting requirements under section 6050H(h) for entities receiving mortgage insurance premiums.
According to the preamble, today’s final regulations adopt the proposed regulations under section 1.6050H-3 with two “minor revisions”—
- The addition of new paragraph “d” that contains a cross-reference to Reg. section 1.6050H-2 regarding the time, form, and manner of reporting qualified mortgage interest, which is intended to clarify that rules similar to the rules applicable to the time, form, and manner of reporting interest received on qualified mortgages apply to amounts required to be reported under Reg. section 1.6050H-3(a)
- The second revision relates to the effective date and applicability of these final regulations, to require information reporting for mortgage insurance premiums received on or after January 1, 2013, and during periods to which section 163(h)(3)(E) is applicable.
In light of the effective date provisions, the final regulations clarify that an 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 file an amended income tax return (Form 1040X) for 2012 to claim a refund based on the treatment of those amounts as qualified residence interest.