Yes you can. Report on Sch A "interest". You must amortize points when you re-finance. But you can take it all in the first year that you purchase the house, when requirements are met. Here's the text from IRS Publication 936....Surely this MUST be the best answer!!!
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Deduction Allowed in Year Paid
You can fully deduct points in the year paid if you meet all the following tests. (You can use Figure B as a quick guide to see whether your points are fully deductible in the year paid.)
Your loan is secured by your main home. (Your main home is the one you ordinarily live in most of the time.)
Paying points is an established business practice in the area where the loan was made.
The points paid were not more than the points generally charged in that area.
You use the cash method of accounting. This means you report income in the year you receive it and deduct expenses in the year you pay them. Most individuals use this method.
The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes.
The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. The funds you provided do not have to have been applied to the points. They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. You cannot have borrowed these funds from your lender or mortgage broker.
You use your loan to buy or build your main home.
The points were computed as a percentage of the principal amount of the mortgage.
The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. The points may be shown as paid from either your funds or the seller's.
Note.
If you meet all of these tests, you can choose to either fully deduct the points in the year paid, or deduct them over the life of the loan.
Home improvement loan. You can also fully deduct in the year paid points paid on a loan to improve your main home, if tests (1) through (6) are met.
2007-02-04 03:17:50
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answer #1
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answered by LuvDylan 5
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Points paid on a purchase money mortgage are deductible in the year paid. You'll get a Form 1098 from the mortgage servicing company that lists the interest and points paid for 2006.
2007-02-04 03:10:21
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answer #2
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answered by Bostonian In MO 7
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I believe so , the TaxAct system asked me for points paid
BUT , read the 1040 instructions for Schedule A . . .
http://www.irs.gov/
2007-02-04 03:10:22
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answer #3
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answered by kate 7
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