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Mortgage Points Tax Deduction

Paying points on a home loan last year makes you eligible to deduct their value.



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Mortgage points tax deduction

Points are extra charges paid at closing and are really nothing more than prepaid interest. They are tax-deductible if you are itemizing.


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Mortgage points deduction in full

To deduct your points in full this year, you must answer yes to the following questions:


  • is the mortgage is secured by your main home?
  • was the loan used to buy or build your main home?
  • are points an established practice in the area?
  • are the points paid not more than usual in that area?
  • has the cash method of accounting been used?
  • have the points been paid in place of normally separate costs?
  • are the total points paid not more than the total un-borrowed funds?
  • were the points computed as a percentage of the loan principal?
  • are the points listed as such on the mortgage settlement statement?



Annual mortgage points deduction

If you cannot claim your points in a single year, you must spread the deduction out for the life of the loan.

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Related IRS publications

Get more information on home mortgage interest tax deduction from IRS Publication 936

For a paper return you need to complete Schedule A and attach it with your return.

Note: you will need an Adobe Acrobat Reader to view these publications, which you can get here. (But you probably already have it.)



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Read this disclaimer: This internet site provides information of a general nature for educational purposes only and is not intended to be legal or tax advice. We make no guarantees as to the validity of the information presented. Your particular facts and circumstances, and changes in the law, must be considered when applying U.S. tax law. You should always consult with a competent tax professional licensed in your state with respect to your particular situation.