Posted on: 25th Jan, 2010 08:07 am
Hi rolled over discount points into a new loan. Is it still deductible even though i didnt pay for them out of pocket??
the points do not appear on my 1098. but are on my closing settlement.
noone seems to be able to give me an answer. thanks.
the points do not appear on my 1098. but are on my closing settlement.
noone seems to be able to give me an answer. thanks.
it's actually an easy question to answer. it's shameful that you've not been able to get someone to do so.
points on a refinance are deductible. however, you must take the amount paid and divide it by the term of your loan, to determine how much is deductible each tax year. for example, if you paid $3000 in points, and you have a 30-year loan, then you can deduct $100 per year. if and when you sell the home, you could deduct all the remaining portion of your points at that time, however. again, an example: if you've deducted for 5 years (100 x 5) and sell in year six, you can then deduct the remaining $2500 all at once on that subsequent tax return.
you can check with the irs on this as well, but that's long been their standard. i hope you've not been asking bank people for this answer, because they really ought to know this. i wouldn't necessarily expect lay people to know it, but i'd presume you were asking "experts."
points on a refinance are deductible. however, you must take the amount paid and divide it by the term of your loan, to determine how much is deductible each tax year. for example, if you paid $3000 in points, and you have a 30-year loan, then you can deduct $100 per year. if and when you sell the home, you could deduct all the remaining portion of your points at that time, however. again, an example: if you've deducted for 5 years (100 x 5) and sell in year six, you can then deduct the remaining $2500 all at once on that subsequent tax return.
you can check with the irs on this as well, but that's long been their standard. i hope you've not been asking bank people for this answer, because they really ought to know this. i wouldn't necessarily expect lay people to know it, but i'd presume you were asking "experts."
thanks George ive been asking Tax "advisors" half have said as i didnt pay out of pocket it is not deductible and the other half say that it is no matter how it was paid?!
whether it's paid out of pocket or built into the new loan amount and therefore borrowed, you're still paying these points. points are deductible, period.