How does TurboTax calculate "points paid on purchase of principal residence" for my deduction? Can I see their calculation for "total 1098 interest and points?

Yes. TurboTax breaks down the points calculation on the Home Mortgage Interest Worksheet, which you can see after you pay for TurboTax.

Points are deducted evenly over the life of the loan. For example, if you paid $12,000 in points on a 15-year (180-month loan) you would deduct $66.67 per month or $800 a year. Since the first and last years are month 12 months, the deduction in those years will be different.

@tylerconway6

Thanks Ernie.

Do you know if it's possible to deduct all the points I paid in the first year? I ask because the points show up on my first 1098, but then my mortgage was sold to another bank and the points don't show up on the most recent 1098 and thus I'm not sure I will be able to deduct these in future years. 

Yes. You can deduct all the points paid in the first year of a new mortgage. Most people do that.

You can deduct the points in full in the year you pay them, if you meet all the following requirements:

1. Your main home secures your loan (your main home is the one you live in most of the time).
2. Paying points is an established business practice in the area where the loan was made.
3. The points paid weren't more than the amount generally charged in that area.
4. You use the cash method of accounting. This means you report income in the year you receive it and deduct expenses in the year you pay them.
5. The points paid weren't for items that are usually listed separately on the settlement sheet such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes.
6. The funds you provided at or before closing, including any points the seller paid, were at least as much as the points charged. You can't have borrowed the funds from your lender or mortgage broker in order to pay the points.
7. You use your loan to buy or build your main home.
8. The points were computed as a percentage of the principal amount of the mortgage, and
9. The amount shows clearly as points on your settlement statement.

Learn more at Topic No. 504 Home Mortgage Points.

Thanks Ernie. I am trying to deduct the points in full, as your most recent post suggests. Right now TurboTax does not appear to be giving me this full deduction --- I will follow up with support directly.