topic Re: Mortgage points in Get your taxes done using TurboTax

Mortgage points

BobboSRQ — Wed, 12 Feb 2025 23:21:03 GMT

I have the desktop Turbotax Deluxe. I bought a new home in 2024 and got a new mortgage. I entered all of the information asked, including the points I paid at closing. It automatically spread the points over the 30 year life of the mortgage. Why? I was under the assumption that I could deduct the full points in 2024. Thanks.

Re: Mortgage points

TomK2023 — Thu, 13 Feb 2025 16:03:04 GMT

It depends. How big was your mortgage?

"Generally, the Internal Revenue Service (IRS) allows you to deduct the full amount of your points in the year you pay them. If the amount you borrow to buy your home exceeds $750,000 ... you are generally limited on the amount of points that you can deduct.

The IRS also imposes the following requirements to deduct mortgage points:

They're discount points (When you buy discount points, you're paying interest up front in exchange for a lower interest rate on your mortgage. Because discount points are prepaid interest, they're deductible as mortgage interest.)
The mortgage is used to buy, build, or improve the home, and the home is the collateral for the loan
Paying mortgage points is a customary practice in your area and the points you paid aren't excessive for your neighborhood
The points were paid directly to the lender, either by you or the seller (no borrowing)
Your down payment, plus any points the seller paid, exceed the points paid amount
You use the cash method of accounting (almost all taxpayers do)
The points are calculated as a percentage of the mortgage principal (not required on home-improvement loans)
The points are clearly itemized on your settlement statement as points (not required on home-improvement loans)

If you aren't able to deduct your points in the year you pay them, you may still qualify to deduct them over the life of the loan."

For more information, you can read TurboTax article: How to Deduct Mortgage Points on Your Tax Return

Re: Mortgage points

BobboSRQ — Thu, 13 Feb 2025 17:45:33 GMT

Thanks for the quick response. The mortgage amount was $250k and I met all of the other qualifications listed. So I am wondering why Turbotax automatically amortized the points over 30 years. I couldn't figure out how to override that.

Re: Mortgage points

AmyC — Fri, 14 Feb 2025 00:43:32 GMT

To deduct 100% of your 2024 points on this tax return, you must check both:

the box "This is a new loan on which I paid points (origination fees) in 2024" and
the box "I bought or improved my main home with this loan in 2024."

Re: Mortgage points

BobboSRQ — Fri, 14 Feb 2025 02:18:57 GMT

Oops - I forgot to check the 2nd box. When I did, it worked as I expected. 🙄 Thank you!