Mortgage Interest and Points deductions

Forum|Forum|6 years ago
February 13, 2020
2 replies
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I am filing a single. I bought primary home in August 2019 and received 1098 from the lender. 1098 clearly shows paid mortgage interest, MIP, points and property tax. I have additional point expenses not shown on 1098 but I can extract from the closing disclosure documents. This is my first home and I have paid total appx $14,500 for pints that I want to take as full deduction for 2019. If I add appx $1920 in property tax, the total deduction would be more than $12,500 standard deduction. But Turbo Tax is not allowing itemized deduction and it is amortizing points over 30 years. Why?

PS: My AGI is about $101,000. Please help how do I take the mortgage interest, MIP, Points, and Property Tax deductions. ~ Thank you!

DavidD66

Level 15

You should go back through the interview section for your Form 1098. You must have inadvertently indicated that your mortgage was a refinance, or somehow didn't otherwise qualify to be deducted in the year paid, otherwise the points would not be amortized over the life of the loan.

You may also be interested in the following IRS Publication on deducting points: Topic No. 504 Home Mortgage Points

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Opus 17

Level 15

Points are only deductible if they are a percent of the loan balance and not allocated to any other costs. Your closing costs are not all deductible “points”. In fact, I just bought a house and the bank listed the $1199 application fee as points on my 1098 and they are wrong, because it was a flat fee and not a percent of the loan balance. Points are considered a form of interest, but not all interest is points. Interest included in your monthly payments Is deductible but are not points.

Then, points are only deductible in full in the year you bought the home if it was a new purchase (not a refi) and if you paid cash at the closing that was equal or more than the amount of points you want to deduct. If you aren’t getting your points deduction in full, you may have answered one of the testing questions wrong.

Your interest, PMI and property taxes are deducted when you enter your 1098 mortgage statement. It sounds like you either answered one of the points questions wrong or you are in a situation where you don’t qualify to deduct points in full.