Magazine article Medical Economics

Pointers on Points

Magazine article Medical Economics

Pointers on Points

Article excerpt

When a lender charges points for the use of money, rather than for services like appraisals, they're deductible as interest. If you took out a new mortgage to buy your main home last year, you can write off any such points you paid on your 1994 return. You can also take a deduction if the lender subtracted the points from the loan, provided you actually paid at least as much for other closing costs. But if you borrowed to improve a home you already own and let the lender take the points out of the loan instead of writing your own check, you'll be required to amortize them (write them off) over the life of the mortgage.

You must also amortize any points you paid to refinance an existing mortgage. One exception: If you increased the refinanced mortgage to pay for improvements on the home, you can claim a current deduction for the points paid on the excess borrowed. …

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