When you filed your 2020 tax return, you should have amortized your points over the life of the loan unless a portion of the loan was used for an improvement to the house and you meet these requirements. Amortizing just means taking a portion of the deduction each year. For example, if you have a 30-year mortgage and paid $3,000 in points, your deduction would be $100/year for the next 30 years or until the loan is paid off. If your loan started in January 2020, you would still have $2,900 in points that you have not yet deducted from your 2020 refinance. Since that loan was sold in 2021, you can use the remaining $2,900 as a deduction this year.
For your 2021 loan, you must amortize the points for a refinance unless it is for an improvement to your home. TurboTax will automatically calculate the correct deduction based on the points paid, the number of months of the loan, and the length of the loan.
