Mortgage Loans and Amortizing Points

[drnash]

Amortizing points on original mortgage in previous tax years but refinanced in 2021 without pre-paid points.  The question is how do I handle the remaining balance for the points from the original loan that were being amortized over the life of  the original loan?

[PattiF]

You can deduct all the points that were being amortized from the original mortgage in 2021 after you refinanced. 

The points from the first refinance are fully deductible in the year that the loan was paid.  IRS Home Mortgage Points, Topic 504, says "You may be able to deduct (in the year paid) points on a loan ... if you refinance your home mortgage"

[drnash]

Thank you for the reply, but I am not sure the reference provided fits my situation.

The complete text of your reference is: You may also be able to deduct (in the year paid) points paid on a loan to improve your main home if you refinance your home mortgage, and you meet tests one through six, above. 

My situation:  The points were paid years ago and have been amortized (total paid/term of loan) ever since.  We refinanced in 2021, which left us with approximately $858 worth of points remaining to be amortized,  Can this remaining (full) amount be claimed (deducted) on our 2021 taxes, is it still amortized over some (or the original) term, or is it simply lost?

The reference provided does not seem to fit our situation.

[PatriciaV]

Yes, you may deduct the balance of amortized points if you refinance the loan (ie: pay it off).

Be sure you carefully answer all questions in the Form 1098 interview for the loan that was paid off. On the page "Tell us about your loan," be sure to check the box "This loan was paid off or refinanced with a different lender in 2021." The next page will confirm the points to be deducted this year.

[drnash]

Patricia, 

Thank you for the response.  I finally found the information I needed, which lines up with what you are saying.  I have not yet been back into the program to follow the bouncing ball.

The information I found states that any remaining balance of points can be deducted fully in the year the original loan was paid off if the new loan was refinanced with a different lender.  If you refinanced with the same lender, then the remaining points are amortized over the term of the new loan.

Dirk