Thank you so much for your time answering this. My same thoughts exactly. It definitely appears that the IRS's intent of this rule is to prevent people from deducting the remaining points after a loan modification vice refinance. I read into the old court ruling that this was based on and the court refers to a refi with the same lender as "prolonging the same obligation", consistent with a loan mod. Since refinancing is paying off the old mortgage and replacing it with a completely new loan (new title search, new lender title insurance, new deed, new amount), wouldn't this fall outside of the rule's intent (or in that grey area) since all remaining points from the old loan were paid off by the borrower?
Thanks again for your help and insight. This is certainly tricky and probably up to each taxpayer to apply this rule correctly.
