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bethamaemoocho
New Member

We refinanced our own home to add an addition. Can we deduct the full loan origination fee from our taxes. Or does this have to be amortized over the life of the loan?

The loan was 153,970.94 of which $7648.94 was the closing costs.  The loan origination fee was $3312.57.

1 Best answer

Accepted Solutions
MargaretL
Employee Tax Expert

We refinanced our own home to add an addition. Can we deduct the full loan origination fee from our taxes. Or does this have to be amortized over the life of the loan?

You can deduct the full amount as interest.

In general, the data entry depends on how you used the loan that you just refinanced. Please read below:

  • If you refinanced your loan  to make improvements, the whole amount is deducted as interest - in TurboTax select box I bought or improved my main home with this loan in 2016
  • If you refinanced our home and the loan is not used for home improvements your origination fees/points paid as a refinance can be deducted pro-rata over the life of the loan.  If you refinanced to a 30-year mortgage, for example, you will deduct a portion of the points each year for 30 years - in TurboTax select box I'm spreading the point (amortizing) over the life of my loan

Here's data entry:

  1. Federal Taxes
  2. Deductions and Credits
  3. Your Home
  4. Mortgage Interest, Refinancing, and Insurance - follow the prompts; when lender's name is entered, select either of the boxes as based on your situation and my explanation above.

View solution in original post

1 Reply
MargaretL
Employee Tax Expert

We refinanced our own home to add an addition. Can we deduct the full loan origination fee from our taxes. Or does this have to be amortized over the life of the loan?

You can deduct the full amount as interest.

In general, the data entry depends on how you used the loan that you just refinanced. Please read below:

  • If you refinanced your loan  to make improvements, the whole amount is deducted as interest - in TurboTax select box I bought or improved my main home with this loan in 2016
  • If you refinanced our home and the loan is not used for home improvements your origination fees/points paid as a refinance can be deducted pro-rata over the life of the loan.  If you refinanced to a 30-year mortgage, for example, you will deduct a portion of the points each year for 30 years - in TurboTax select box I'm spreading the point (amortizing) over the life of my loan

Here's data entry:

  1. Federal Taxes
  2. Deductions and Credits
  3. Your Home
  4. Mortgage Interest, Refinancing, and Insurance - follow the prompts; when lender's name is entered, select either of the boxes as based on your situation and my explanation above.
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