I did a cash-out refinance loan in order to make home improvements. Because it's a re-fi for improvements that go back into the home, I'm allowed to deduct the points all in one year and not amortize over the life of the loan.
On the closing statement it shows three items for Loan Charges:
What is the amount I'm allowed to deduct when I'm asked for the Origination Fees? There is only one "box" to enter data, but several categories count as origination fees, so I assume there is some math involved.
Do I treat the negative discount points as a positive value when entering the Origination Fee for a value of $3245 or do I ignore the discount points ant put in $1595?
Do I include the prepaid interest with the Origination fees as well?
Thank you so much for your assistance.
Is this for a rental or your personal home? Origination fees for a refinanced loan are not deductible on a personal loan. The points are deductible in full for the portion of the loan you use to improve your loan. The points for the portion of the loan that are used to refinance your existing loan must be amortized over the life of the loan. The prepaid interest should be reported to you on Form 1098 as part of the interest paid during the year.
If it is a rental, your origination fees are amortized over the life of the loan. For more information, you can see this TurboTax article.