Mortgage Insurance Premium DeductionQualified mortgage insurance premiums are deductible as qualified residence interest if the amounts: (1) are paid or accrued before Jan. 1, 2012; (2) aren't properly allocable to any period after Dec. 31, 2011; and (3) are paid or accrued with respect to a mortgage insurance contract issued after Dec. 31, 2006.To be deductible, the premiums must have been paid in connection with acquisition debt for a mortgage insurance contract issued after Dec. 31, 2006. It must be for a qualified residence (first and second homes) and the premiums must have been paid or accrued after Dec. 31, 2006 and before Jan. 1, 2012. The deductible amount of the premiums phases out ratably by 10% for each $1,000 (or fraction thereof) by which the taxpayer's AGI exceeds $100,000 (10% for each $500 (or fraction thereof) by which a married separate taxpayer's AGI exceeds $50,000).Qualified mortgage insurance means mortgage insurance provided by the Veterans Administration (VA), Federal Housing Administration (FHA), or Rural Housing Administration (RHA), and private mortgage insurance, as defined by Sec. 2 of the Homeowners Protection Act of '98 (12 U.S.C. 4901), as in effect on Dec. 20, 2006. Prepaid premiums for mortgage insurance, other than that provided by the VA or RHA, are not fully deductible in the year the premiums are paid but must be amortized over the shorter of the stated term of the mortgage or 84 months, starting with the month in which the insurance was obtained. The unamortized balance is not deductible if the mortgage is paid off before the end of its term.