HI withea9,
To add in my comments with those of others, I answer your initial question with a resounding 'YES'! California does allow for the points deduction and in fact, allows for the claiming of a larger deduction for mortgage interest than does the IRS. Hence, the reason for the message advises that it would be possible to have a larger mortgage interest deduction than shown on the Federal return!
Goodluck to you!
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