Bought a house last year (for primary residence) but we did not get a 1098 from the original lender (lender sold the loan a month later to another mortgage co). We paid for "Loan Origination Fees" which amounts to .162% (or .00162) of the loan amount.
The lender's closing statement shows Origination Charges broken down into separate lines as follows:
- "% of Loan Amount (Points)" as blank
- "Loan Origination Fees" as $xxx ---- (not shown as % itself but when we computed, it's equivalent to .162% (or .00162) of the loan amount)
Escrow Closing Statement shows "Lender Origination Fee" for the same amount (.162% of loan).
We do not have HUD-1 or 1098; we're in CA and we're told the HUD-1 is replaced by Closing Disclosure forms. So our questions are:
- Is the Lender Origination Fee tax deductible in this case, even though it is a tiny % of the loan amount?
- How do we know whether our situation satisfies the IRS requirement: "The points were computed as a percentage of the principal amount of the mortgage."? Does it have to be explicitly stated as a %?
No, your loan origination fee is not deductible. In order to be deductible points and loan origination fees must be represented as a percentage of the loan. Based on your description, the fees are not deductible.