Now the latter sounds best to me :) But the reasoning is sound also. With the divide by 84 method that refers to private mortgage insurance where you are paying the entire premium, with no monthly payments after. For FHA loans there are two payments, the Mortgage Insurance Premium (MIP) and an Up Front Mortgage Insurance Payment (UFMIP). The MIP is the monthly payments made after.
Now, after some research I found that years ago there would be a refund if mortgage was terminated within 7yrs (84 months :) Then it was reduced to 5yrs. Then it was stopped altogether unless it was refinanced with another FHA, and that was only up to 3yrs.
So...as I see it, it is a one time payment for mortgage insurance and I will deduct in the year it was paid regardless of whether I financed it as it was still paid. Just like I will pay for my insulation on credit card but still claim it for this year.
Another person (who is a CPA) said that you have to divide the financed portion by 84 then multiply by the amount of months you had the house. Plus add the individual monthly payments. For example I bought my house April 24th 2009. So including April that is 9 months.
I have the same question. Box 4 definitely has both my financed PMI and the monthly PMI for 2009 added together. Do I just enter Box 4 into Turbo Tax or subtract the upfront PMI which was financed. Or is the upfront divided by 84 and multiplied by the number of months I had the house in 2009 (I saw an example of this on the IRS website). Please let me know if you found an answer to this. Thank you.