Can I amortize my mortgage points if it wasn't a second home, a home equity loan, or refinanced?

[TheLegazy]

We bought a house late '20 and when doing my taxes I think I might have misunderstood the language. I selected yes to the question "Are you spreading points over years?" (paraphrasing) as I thought it was a choice. It was negligible if anything since the loan was originating 12/25/20. 

However, as I read through it again this year I realized the language states that it is in the instance of a second home, a home equity loan, or a refinance. So did I make a mistake in my '20 filing? I ended up taking the standard deduction, so I don't believe I got any benefit from it. I just want to be consistent in my filings... 

[Vanessa A]

If you took the standard deduction, then it did not have any affect at all on your return, so there is nothing to worry about. It was not reported anywhere so there is nothing to be consistent with. 

If the loan was for your primary home, you could still amortize points. 

[TheLegazy]

Hi Vanessa, 

Thank you for the confirmation on both pieces, especially that I can amortize even if it's a regular loan for my primary residence. 

My last question would related to having two 1098s since my loan was sold during the year. Do I put the points being amortized only on one of the 1098s or both? I did both initially and it seemed to deduct twice, which didn't seem right. 

[Vanessa A]

If the same points are reported on both 1098's then you would only enter them once.  Since the loan was sold and not refinanced, it is likely that it is the same points reported twice so you can enter the ones on the newest 1098. 

[TheLegazy]

Hi Vanessa, 

Thanks again for the help. 

I don't see any points on my 2021 1098, I only saw it on my 2020 1098 which was from the original lender. So for 2021, should I just select to amortize it under the original lender's 1098 and next year do it under the new lender's 1098 (which will be my only 1098 if they don't sell it)? 

[TheLegazy]

Hi @Vanessa A , 

Just wanted to follow up on the last question: 

I don't see any points on my 2021 1098, I only saw it on my 2020 1098 which was from the original lender. So for 2021, should I just select to amortize it under the original lender's 1098 and next year do it under the new lender's 1098 (which will be my only 1098 if they don't sell it)? 

[AmyC]

You only pay point/ loan origination fees, when you take out a loan. You do not pay those fees when the loan is sold. If you did not claim the fees in 2020, you could amend your 2020 return and claim those fees. Since you purchased late in the year and chose to amortize - the standard deduction was better and may still be even after adding points. Amending may not help you at all. For 2021, if amending 2020, do not include amortized points in 2021. If you are not going to amend 2020, then you can continue with amortizing points from 2020 on your 2021 return.