It depends. Generally, the IRS allows you to deduct the full amount of your points in the year you pay them. If the amount you borrow to buy your home exceeds $750,000 million ($1M for mortgages originated before December 15, 2017), you are generally limited on the amount of points that you can deduct.
If you aren't able to deduct your points in the year you pay them, you may still qualify to deduct them over the life of the loan.
See IRS, Mortgage Points
How to Deduct Points
As far as filing taxes goes, claiming a tax deduction for mortgage points is a fairly straightforward process. Mortgage points are considered an itemized deduction and are claimed on Schedule A of Form 1040. Here are the specifics:
- Usually, your lender will send you Form 1098, showing how much you paid in mortgage points and mortgage interest
- Transfer this amount to line 10 of Form 1040 Schedule A
- If any of your points were not included on Form 1098, enter the additional amount you paid on line 12 of Form 1040 Schedule A
For many taxpayers, the process really is this simple. In some cases, though, calculating and deducting mortgage points can be tricky. With TurboTax, just answer a few simple questions and we can help you get the proper deduction for your mortgage points.
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