Is it possible to deduct loan rate modification (not a refinance) fees paid to lower the interest rate on a rental property?

[sberry192]

I paid a flat fee to reduce the interest rate on my rental property mortgage, but left all other terms as-is. I see a place to add deductions for refinance fees, but the wording there does not apply to a rate modification.

[JohnB5677 · Accepted solution]

The fee you refer to is commonly referred to as Points, and yes you can enter them into the Mortgage Interest and Refinancing (Form 1098) section of TurboTax.

To enter your 1098 Mortgage Interest statement.

1. Log into TurboTax
2. Select Deductions and Credits [Review/Edit]
3. Mortgage Interest and Refinancing (Form 1098) [Edit/Add]
4. Add a other 1098 or select your bank
5. Continue to follow the interview
6. Did you pay points in 2020 when you took out the loan?
7. We paid points when we refinanced, purchased a second home, or opened a home equity loan in 2020
8. Tell us about the points you paid on your mortgage

9. Enter your information here.

Note: if you enter your property taxes from your 1098 you will not have to enter them again in the property tax section

[sberry192]

Thanks for the reply @JohnB5677 . Just to be clear, nothing in my Mortgage Rate Modification paperwork mentions points and this value is not included in the 1098 form I received from my credit union. Would I still characterize this as points for my taxes?

[JohnB5677]

That is okay and anticipated.  If you look at the entry screen it says:

Tell us about the points you paid on your mortgage

You can get a deduction for the points you paid on your home loan, but we'll have to spread out the points over the life of your loan (amortize your points). Learn more

These points may not always appear on your 1098, but will be reported on your Closing Disclosure or HUD-1 as origination charges.

You can enter them here.