topic Do I count loan processing fee and origination fee under points? in Deductions & credits

Do I count loan processing fee and origination fee under points?

nurse_ashell — Sun, 14 Jun 2020 16:44:31 GMT

Do loan processing fees and origination fees count as points?

Re: Do I count loan processing fee and origination fee under points?

VictoriaD75 — Mon, 15 Jun 2020 12:45:47 GMT

The term points is used to describe certain charges paid to obtain a home mortgage. Points are prepaid interest and may be deductible as home mortgage interest. Generally, loan processing fees are not treated as prepaid interest and are not deductible. This is a fee for the services from the lender. However, lenders may treat origination fees as points. It depends on the lender.

Typically, points are reported in box 6 of the Form 1098 received from the lender.

The tax treatment of these points will depend on the loan. If such points paid on a mortgage were for the purchase or improvement of a personal residence, they may be deducted in the year they are paid. Points paid to refinance a home mortgage are not deductible when paid, but must be capitalized and the deduction spread over the life of the loan (amortized). Points charged for specific loan services, such as the lender's appraisal fee and other settlement fees, are not deductible.

Home Mortgage Points

Re: Do I count loan processing fee and origination fee under points?

Opus 17 — Mon, 15 Jun 2020 19:41:18 GMT

"Points" are pre-paid interest. Usually to get a lower interest rate. To be deductible as "points", the amount must be a percentage of the loan, and can't be charged for any other service provide by the bank. An "application fee" or "loan origination" fee might be points if it is a percentage of the loan amount. (A flat $500 application fee is not points, but a loan origination fee that was 1% of the amount borrowed might be points. Similarly, any fees marked as being for the bank attorney, survey, inspection, appraisal or any other item is not points.)