Solved: Mortgage Points Deduction After 2nd Refinance
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bigred1821
Level 2

Mortgage Points Deduction After 2nd Refinance

I refinanced at the beginning of 2020 to a 20 year loan and paid 0.75 points ($2,707.50) to lower the rate. Now I know that I have to deduct that over the life of the loan ($2707.50 / 20 years = $135.37 per year), but now I am refinancing again in 2021 since the rates have dropped even more. I am now going to a 15 year loan and will have the same payment that I have as I am paying biweekly payments now. My question is how do I go about deducting the the other 19 years worth of points from the 20 year loan? Do I deduct it all on next years taxes since that loan is getting paid off in 2021? Or is it more complicated than that?

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Accepted Solutions
Opus 17
Level 15

Mortgage Points Deduction After 2nd Refinance

Yes, if you are refinancing with a different lender in 2021, the remaining points from the old loan can be deducted in a lump sum on your 2021 tax return.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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4 Replies
Opus 17
Level 15

Mortgage Points Deduction After 2nd Refinance

If you are refinancing with a different lender, you can deduct the remaining points when you pay off the old loan. If you refinance with the same lender, you must add the old points to any new points and spread them out over the new term.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
bigred1821
Level 2

Mortgage Points Deduction After 2nd Refinance

Just to confirm, when my new lender pays off my old lender, which should be next month, that is the moment that I can deduct the remainder of the points from the old loan? So that would mean with my Tax Year 2021 taxes, correct?

Opus 17
Level 15

Mortgage Points Deduction After 2nd Refinance

Yes, if you are refinancing with a different lender in 2021, the remaining points from the old loan can be deducted in a lump sum on your 2021 tax return.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

bigred1821
Level 2

Mortgage Points Deduction After 2nd Refinance

Copy that. Thank you very much.

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