Is an FHA Loan's MIP Tax Deductible?

[Nick Gray]

I have a 4-unit MFR under contract and I am comparing financing options for down payments of 10% and below. Not surprisingly, banks are pitching me hard on the FHA loan, which would carry a 1.75% upfront MIP rolled into the loan and a 0.80-0.85% rate premium tacked onto the regular interest rate. I am skeptical about FHA loans, but I am wondering if the federal tax code softens the impact of the MIP.

Is this FHA mortgage insurance, both the upfront loan add-on and the monthly premium, tax deductible for federal income taxes? If so, is the deduction eliminated if/when I perhaps move out of the property at some point in the future and the building becomes 100% a rental property? I assume the upfront MIP, if tax deductible at all, would need to be deducted over the 30-year life of the loan.

P.S. I live in New Hampshire, so I don't pay state income taxes and don't need an answer for this question as it pertains to state law.