paid points will be deductible?

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can I fully deduct the points I paid for the mortgage in the same year I paid them,thanks

colin · Posted: Tue Feb 27, 2007 2:04 pm Post subject:

Hi Katheren,

Welcome to Mortgagefit forum.

You would be able to fully deduct the points in the year in which they are paid if:

The mortgage is secured on your primary residence.

In the region where your home is, payment of points is a known business practice.

You did not pay points than what is charged from other borrowers in your locality.

You report your income in the year in which it is received and deduct the expenses in the year you actually pay them. This method is known as Cash method of accounting.

The points you paid were not in place of title fees, property taxes, inspection fees, appraisal fees or title fees. These are normally stated on your settlement statement.

The mortgage was used for the purpose of buying or building your primary residence.

These points were a certain percentage of the mortgage.

The amount paid as points is clearly shown on the HUD-1 settlement statement. You can show the points paid from your funds.

Colin

Guest 0.10 Dollars($)

Another thing is that the points which were charged should be equal to the points seller had paid plus the funds you had provided towards escrow deposit, down payment, earnest money or any other similar expenditure at the time of closing. But such funds cannot be borrowed from your broker or lender.

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