Can I get a tax deduction for PMI?
No. And I'll let my good friend and fellow blogger Kay Bell answer in some detail, in her article Deducting private mortgage insurance.
A few things to keep in mind.  A 90% mortgage is $76,500, PMI for 10% down is $76,500/2300 = $33/mo. This, plus $557 is still lower than your rent. I'd take the 15 since you want to get rid of that PMI as soon as you can. Often the bank will require the PMI be removed only after the regularly scheduled payments have gotten you to 20% equity, prepayments mat not count. This may have changed recently. Check to be sure.  Even in 5 years, you'll save compared to the rent, and from this point, odds are it will increase in value. I'd not count on any tax deduction. Your standard deduction is $11,400. Even at the higher rate, you'd have $3200 in interest, property tax can't be over $2000. You have an easy tax return, I'd say. Good luck.  UPDATE - it's now 2016 - The standard deduction is $12,600 for a couple. With the interest maybe at $3200, and property tax at $2000, curious why any other readers would think the OP would be itemizing. I will add one point missing from the answers by CQM and THEAO. When you take a loan and invest the proceeds, the interest that you pay on the loan is deductible on Schedule A, Line 14 of your Federal income tax return under the category of Investment Interest Expense.  If the  interest expense is larger than all your investment earnings (not just those from the loan proceeds), then you can deduct at most the amount of the earnings, and carry over the excess investment interest paid this year for deduction  against investment earnings in future years. Also, if some of the earnings are long-term capital gains and you choose to deduct the corresponding investment interest expense, then those capital gains are taxed as ordinary income instead of at the favored LTCG rate. You also have the option of choosing to deduct only that amount of interest that offsets dividend (and short-term capital gain) income that is taxed at ordinary rates, pay tax at the LTCG rate on the capital gains, and carry over rest of the interest for deduction in future years. In previous years when the tax laws called for  reduction in the Schedule A deductions for high-income earners, this investment interest expense was exempt from the reduction. Whether future tax laws will allow this exemption depends on Congress. So, this should be taken into account when dealing with the taxes issue in deciding whether to take a loan to invest in the stock market. Didn't see it mentioned so far, but depending on modified AGI you may be prevented from a tax deduction for your contribution to a Traditional IRA if you or your spouse are offered a retirement plan at work, even if you don't participate in it.  See the IRS page here for the details of deduction limitability: https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work In my opinion, because I heavily favor all the benefits of the Roth, I'd contribute first to a Roth IRA and then to the Roth 401(k).   The former first because it puts the money in a place where you have more control over fees and how it is invested.   The latter because the contribution limits are much higher than the IRA, and the money grows tax-free and incurs no taxes on withdrawal. "ASSUMING you're talking about a property in the United States, the answer generally would be ""no"".  You aren't actually paying any of the expenses for the property and yet you want to take the deductions for doing so?  That's a rather cheeky move, I'd say! (grin)   It probably would lead to some real strife with your brother, since he would have proper claim to those credit on the basis he's the one footing the bills for the property.  Before you do anything like what you're talking about, it might be best to speak with him, because both of you are running the very real risk of an audit, and if that happens then I can guarantee the IRS will slap the daylights out of you for it.  Your brother, I'm sure, is already claiming all of the deductions he can for what he's putting into the property, and on top of that you want to file for your half.  What half are you referring to, when your out-of-pocket is zero?  So what you're saying is, you think that between you and your brother you should be able to take a credit of 150% of the actual deductions...Sounds like a recipe for disaster to me. I strongly encourage you to talk to a tax professional, but if you get a different answer to this than what I've already given then I'd be stunned.   I hope this helps. Good luck!" "To claim medical expenses on your taxes they need to exceed 7.5% of your AGI, and then only the amount over 7.5% is deductible.  That's not much.  There is no ""floor"" if you use an FSA as it's all pre-tax. If you're concerned about use or lose, then allot less next year.  It's all what you're comfortable with." Don't forget to take into account the tax deductability of the interest and PMI into the equation. Of course, this would based on your current pay rate, and your rates after marriage.  Your mentioning the flexibility in future changes is also a key aspect to take into consideration. "You can deduct what you pay for your own and your family's health insurance regardless of whether it is subsidized by your employer or not, as well  as all other medical and dental expenses for your family, as an itemized deduction on Schedule A of Form 1040, but only to the extent that the  total exceeds 7.5% of your Adjusted Gross Income (AGI) (10% on tax returns for year 2013 onwards). As pointed out in KeithB's comment, you cannot deduct any health insurance premium (or other medical expense) that was paid for out of pre-tax dollars, nor indeed can you deduct any medical expense to the extent that  it was paid for by the insurance company directly to hospital or doctor (or reimbursed to you) for a covered expense; e.g. if the insurance company reimbursed you $72 for a claim for a doctor's visit for which you paid $100 to the doctor, only $28 goes on Schedule A to be added to the amount that you will be comparing to the 7.5% of AGI threshold, and the $72 is not income to you that needs to be reported on Form 1040. Depending on other items on Schedule A, your total itemized deductions might not exceed the standard deduction, in which case you will likely choose to use the standard deduction. In this case, you ""lose"" the deduction for medical expenses as well as all other expenses deductible on Schedule A. Summary of some of the discussions in the comments   Health care insurance premiums cannot be paid for   from HSA accounts (IRS Pub 969, page 8, column 2, near   the bottom) though there are some exceptions.  Nor   can health care insurance premiums be paid from an   FSA account (IRS Pub 969, page 17, column 1, near the top). If you have a business on the side and file a Schedule C as a self-employed person, you can buy medical insurance for that business's employees (and their families too, if you like) as an employment benefit, and pay for it out of the income of the Schedule C business, (thus saving on taxes). But be aware that if you have employees other than yourself in the side business, they would need to be covered by the same policy too.  You can even decide to pay all medical expenses of your employees and their families too (no 7.5% limitation there!) as an employment benefit but again, you cannot discriminate against other employees (if any) of the Schedule C business in this matter.  Of course, all this money that reduced your Schedule C income does not go on Schedule A at all. If your employer permits your family to be covered under its health insurance plan (for a cost, of course), check whether you are allowed to pay for the insurance with pre-tax dollars.  The private (non-Schedule C) insurance would, of course, be paid for with post-tax dollars.  I would doubt that  you would be able to save enough money on taxes to make up the difference between $1330/month and $600/month, but it might also be that the private insurance policy covers a lot less than your employer's policy does.  As a rule of thumb, group insurance through an employer can be expected to offer better coverage than privately purchased insurance. Whether the added coverage is worth the additional cost is a  different matter.  But while considering this matter, keep in mind that privately purchased insurance is not  always guaranteed to be renewable, and a company might decline to renew a policy if there were a large number of claims. A replacement policy might not cover pre-existing conditions for some time (six months? a year?) or maybe even permanently.  So, do consider these aspects as well.  Of course, an employer can also change health insurance plans or drop them entirely as an employment benefit (or you might quit and go work for a different company), but as long as the employer's health plan is in existence, you (and continuing members of your family) cannot be discriminated against and denied coverage under the employer's plan." Two points You don't really get the full 10,000 annual interest as tax free income.  Well you do, but you would have gotten a substantial amount of that anyway as the standard deduction. ...From the IRS.... Standard deduction The standard deduction for married couples filing a joint return is at $11,900 for 2012. The standard deduction for single individuals and married couples filing separate returns is $5,950 for 2012. The standard deduction for heads of household increases by $50 to $8,700 for 2012. so If you were married it wouldn't even make sense to claim the 10,000 mortgage interest deduction as the standard one is larger. It can make sense to do what you are talking about, but ultimately you have to decide what the effective interest rate on your mortgage is and if you can afford it. For instance.  I might have a 5% mortgage.  If I am in a 20% tax bracket it effectively is a 4% mortgage to me.  Even though I am saving tax money I am still paying effectively 4%.  Ultimately the variables are too complex to generalize any hard and fast rules, but it often times does make sense. (You should also be aware that there has been some talk of eliminating or phasing out the mortgage interest deduction as a way to close the deficit and reduce the debt.) I would consult a tax professional for specific help.  On my own research, I believe that you could.  I know that when I made payments when I was in school for my undergraduate, I made payments on the interest.  I believe that I was even told by my financial aid office that I could deduct the interest that I paid.  I made not much money so I wasn't anywhere close to the MAGI >75k, but I believe you still could.   Not only that but one other thing to consider is that if you have an unsubisidized loan, the interest still accrues when you are in school.  In that case, it might be better to make at least some payments.  It would save you from the total loan amount ballooning so much while you are in school. It sounded an interesting question, so I looked it up. The reason I asked about the tax years is because it matters. If the bonus was paid, and then returned in the same year - it should not appear on your W2 at all, and your taxes would be calculated accordingly. You might end up with overpayment of FICA taxes, but you can get that credited on your tax return. If, however, the repayment is not in the same year as the payment, it becomes more complicated. The code section that deals with it is 26 USC § 1341. What it says, in short, is this: you can deduct the repaid amount from your current taxable income, but only if its more than $3000. The tax benefit of such deduction cannot exceed the actual tax paid on this in the year when you got the bonus (i.e.: you need to calculate that year with the amount, and without the amount - the credit cannot exceed the difference). But it can also not exceed the amount you would be paying on that amount in the current year (i.e.: if current taxes are less than that year - you lost the difference). If the signing bonus is less than $3000 and it spans across tax years - you cannot deduct it. Bummer. "You need to do a bit more research and as @littleadv often wisely advises, consult a professional, in this case a tax layer or CPA. You are not allowed to just pull money out of a property and write off the interest.  From Deducting Mortgage Interest FAQs If you own rental property and borrow against it to buy a home, the   interest does not qualify as mortgage interest because the loan is not   secured by the home itself. Interest paid on that loan can't be   deducted as a rental expense either, because the funds were not used   for the rental property. The interest expense is actually considered   personal interest, which is no longer deductible. This is not exactly your situation of course, but it illustrates the restriction that will apply to you.  Elsewhere in the article, it references how, if used for a business, the interest deduction still will not apply to the rental, but to the business via schedule C.  In your case, it's worse, you can never deduct interest used to fund a tax free bond, or to invest in such a tax favored product.  Putting the facts aside, I often use the line ""don't let the tax tail wag the investing dog."" Borrowing in order to reduce taxes is rarely a wise move. If you look at the interest on the 90K vs 290K, you'll see you are paying, in effect, 5.12% on the extra 200K, due the higher rate on the entire sum. Elsewhere on this board, there are members who would say that given the choice to invest or pay off a 4% mortgage, paying it off is guaranteed, and the wiser thing to do. I think there's a fine line and might not be so quick to pay that loan off, an after-tax 3% cost of borrowing is barely higher than inflation. But to borrow at over 5% to invest in an annuity product whose terms you didn't disclose, does seem right to me. Borrow to invest in the next property? That's another story." You understand it perfectly right. The thing with PMI is that when your home price rises (or your loan balance goes down) so that your loan balance is below the 80% of the current house price, the PMI goes away. The higher rate - does not. So, no-PMI option is much better. To the bank, as you suspected. Your calculations are correct. With the PMI you'll pay less interest, and more balance. As to the tax deductions, interest can be deducted, but the PMI - no (starting of 2012, to the best of my understanding, at least). See details here, consult a tax professional for more current information. Couple of points about being a consultant in the US: It sounds like the rules for what you can deduct may be more lax in Italy.  For example, you can deduct a certain percentage of your home for work but the rules are relatively strict on your use of that space and how much is deductible.  Also things like clothes, restaurants, phones, car use, etc must follow IRS guidelines to be deductible.  This often means they are used exclusively for work and are required for work.  A meal you eat by yourself is not generally deductible, for example.  Any expense you would have had anyway if you were not working is generally not deductible. A contractor in the US can organize in various ways, including sole proprietorship, an S-corp, and a C-corp.  Each has different tax and regulatory implications.  In the simple case of a sole proprietorship, one must pay not only regular income tax but also self-employment tax, which is the part of social security and medicare tax normally paid for by one's employer.  Estimated taxes must be paid to the government quarterly and then the actual amount due synced up at the end of the year (with the government sending you the difference or vice versa). Generally speaking contractors may set aside more money pre-tax for retirement and have better investment options.  This is because solo 401(k) retirement accounts are cost-effective and flexible and the contractor can set aside the full $18K pre-tax as well as having the company contribute generously (pre-tax) to the retirement account.  Contractors can also easily employ spouses and set aside even more. The details of how frequently you are paid as a contractor and how much notice (if any) the company must give you before terminating your relationship are negotiated between you and the company and are generally pretty flexible.  You could get paid your whole year salary in a lump sum if you wanted.  The company that is paying you will not normally give you any benefits whatsoever...in this way it is the same situation as it is in Italy. By the way the three points you mention in your edit are definitely not true in the US. "How can I avoid this, so we are taxed as if we are making the $60k/yr that we want to receive?  You can't. In the US the income is taxed when received, not when used. If you receive 1M this year, taking out 60K doesn't mean the other 940K ""weren't received"". They were, and are taxable. Create a pension fund in the corporation, feed it all profits, and pay   out $60k/yr of ""pension"". I doubt that the corporation could deduct a   million a year in pension funding. You cannot do that. You can only deposit to a pension plan up to 100% of your salary, and no more than $50K total (maybe a little more this year, its adjusted to inflation). Buy a million dollars in ""business equipment"" of some sort each year   to get a deduction, then sell it over time to fund a $60k/yr salary. I   doubt such a vehicle exists. If there's no real business purpose, it will be disallowed and you'll be penalized. Your only purpose is tax avoidance, meaning you're trying to shift income using your business to avoid paying taxes - that's illegal. Do crazy Section 79 life insurance schemes to tax-defer the income.   The law caps this so I can only deduct < $100k of the $1 million   annually, and there are other problems with this approach.\ Yes. Wouldn't go there.  Added: From what I understand, this is a term life insurance plan sponsored by the employer for the employee. This is not a deferral of income, but rather a deduction: instead of paying your term life insurance with your own after tax money, your employer pays with their pre-tax. It has a limit of $50K per employee, and is only available for employees. There are non-discrimination limitations that may affect your ability to use it, but I don't see how it is at all helpful for you. It gives you a deduction, but its money spent, not money in your pocket. End added. Do some tax avoidance like Facebook does with its Double Irish trick,   storing the income in some foreign subsidiary and drawing $60k/yr in   salary to be taxed at $60k/yr rates. This is probably cost-prohibitive   for a $1MM/yr company. You're not Facebook. What works with a billion, will not work with a million. Keep in mind that you're a one-man business, things that huge corporations like Google or Facebook can get away with are a no-no for a sole-proprietor (even if incorporated). Bottom line you'll probably have to pay the taxes. Get a good tax professional to help you identify as much deductions as possible, and if you can plan income ahead - plan it better." You cannot deduct. Even if you could, unless you also hold the mortgage, it's unlikely that you would have sufficient deductions to exceed the standard deduction for a married couple.