A "point" is a percentage fee charged to by a lender to obtain a mortgage loan. Loan points, are also referred to as Loan Origination Fees or Loan Discounts.
Points paid to purchase, build, or improve the principal residence in which you will live can be deducted in full in the year incurred, otherwise points are "amortized" over the life of the loan such as in a refinancing situation or for the acquisition of any property that is not the principal residence of the taxpayer.
Interestingly if a seller elects to pay all or part of the points to help the buyer get the mortgage, or as an additional incentive to buy, the seller-paid amount is considered to have been paid by the buyer.
The mortgage lender generally will report any points paid in the acquisition of the loan on a principal residence on IRS Form 1098.
Deductible points are limited by the same $1 Million in acquisition debt as mortgage interest.
No comments:
Post a Comment