Mortgage Points: Tax Time Deduction

One point is equal to 1% of your loan paid upfront at closing in an effort to stick you're a lower . While it isn't applied to the principle of your loan, it may be beneficial down the road. paid are deductible in the following cases:

  • The loan secures your
  • The loan was taken either buy, build, or improve the home
  • Paying in points is an acceptable and often used option in the location of your new home
  • The points are calculated as a percentage of the loan principal
  • The buyers settlement statement clearly details points paid
  • Down payments, other that you put towards the purchase of your home is at minimum the same amount in points you paid on the loan

Paying points as a method of , allows you to deduct a portion of what you paid every year for the term of the loan. For example, 1,000 in points spent to refinance a loan for 10 years is equal to $100 per year .