Mortgage points are tax deductible so long as they are true discount points to buy down the interest rate. Because mortgage interest is tax deductible, the mortgage points paid to lower the interest rate are like prepaying interest.
Usually, your lender will send you a Form 1098, that shows how much you paid in mortgage points and mortgage interest during the year. But if any of your points were not included on Form 1098, you can enter the additional amount you paid. It will go on line 8c, "Points not reported to you on Form 1098," of Form 1040 Schedule A.
Points you paid only to borrow money are generally deductible over the life of the loan. See Pub. 936 to figure out the amount you can deduct. Points paid for other purposes, such as for a lender's services, aren't deductible.
You can use the following steps to add your points:
- Select "Deductions & Credits
- Click Edit/Add next to Mortgage Interest and Refinancing (Form 1098)
- Click Edit next to the correct mortgage lender
- Verify the entries on the 1098 (this does not include your points) and click Continue
- On the points screen select "We paid points" and "Continue"
- Provide your information regarding your points paid that were not on Form 1098.
- Click Continue.
- Answer any follow-up screens.
Click here for "Publication 936 (2024), Home Mortgage Interest Deduction"
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