Claim mortgage refi points for last 2 refis?

Forum|Forum|4 years ago
February 9, 2022
1 reply
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In 2020 I refinanced the mortgage on the only home I own and where I currently live and paid points.

In 2021 I refinanced the same mortgage and once again paid points. This is still the only residence I own & where I'm currently living.

When I file my 2021 taxes am I able to claim the points for both the 2020 refi & the 2021 refi or am I only allowed to claim points on one of the refis or the most recent refi?

DavidD66

Level 15

The remaining points from the 2020 refinance become 100% deductible in 2021 when you did another refinance (paid of the 2020 loan). So on your 2021 tax return, you will deduct all of the remaining points from the 2020 refinance, and the amortize the 2021 refinance points over the life of the loan.

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dts002Author

Level 2

What do you mean by "deduct all of the remaining points from the 2020 refinance"?

Does this mean that I will put down the exact dollar amount within my 2021 Tax return for the amount that I paid in points for the 2020 refinance?

"And then amortize the 2021 refinance points over the life of the loan."

Does this mean that I will put down the exact dollar amount within my 2022 Tax return for the amount that I paid in points for the 2021 refinance?

Please clarify.

RaifH

Level 10

When you filed your 2020 tax return, you should have amortized your points over the life of the loan unless a portion of the loan was used for an improvement to the house and you meet these requirements. Amortizing just means taking a portion of the deduction each year. For example, if you have a 30-year mortgage and paid $3,000 in points, your deduction would be $100/year for the next 30 years or until the loan is paid off. If your loan started in January 2020, you would still have $2,900 in points that you have not yet deducted from your 2020 refinance. Since that loan was sold in 2021, you can use the remaining $2,900 as a deduction this year.

For your 2021 loan, you must amortize the points for a refinance unless it is for an improvement to your home. TurboTax will automatically calculate the correct deduction based on the points paid, the number of months of the loan, and the length of the loan.