Mortgage Points on Loans > 750K

[CobolCJava]

If my new home loan amount is > 750K (1M) and I paid for 2 points, then is the interest AND the amount I paid for points deductible? I do understand that I need to meet multiple conditions to be able to deduct points as described in https://turbotax.intuit.com/tax-tips/home-ownership/how-to-deduct-mortgage-points-on-your-tax-return...

But it not clear if the cost of points can be added if the loan amount exceeds 750K. 

For e.g., say I have a loan for 1M @ 3%, and the interest portion for the first 750 for the first year comes out to be approximately 22K (out of the total ~30K interest) and if I paid 20K for points, can I deduct a total of 42K? Or are there any limitations?

Thanks

[AmeliesUncle]

Points are prepaid interest.

So if you are allowed to deduct it all in the first year, in your example you paid $50,000 of interest ($30,000 plus the $20,000 of points).

Then that is prorated based on the $750,000 limit.

[CobolCJava]

If I understood you correctly, I can deduct 75% of the sum of interest and points. Is there any mechanism to deduct the entire amount spent on points, perhaps by spreading it over several years?

[ReneeM7122]

It depends.  Generally, the IRS allows you to deduct the full amount of your points in the year you pay them. If the amount you borrow to buy your home exceeds $750,000 million ($1M for mortgages originated before December 15, 2017), you are generally limited on the amount of points that you can deduct.

If you aren't able to deduct your points in the year you pay them, you may still qualify to deduct them over the life of the loan.  

See IRS, Mortgage Points

How to Deduct Points

As far as filing taxes goes, claiming a tax deduction for mortgage points is a fairly straightforward process. Mortgage points are considered an itemized deduction and are claimed on Schedule A of Form 1040. Here are the specifics:

• Usually, your lender will send you Form 1098, showing how much you paid in mortgage points and mortgage interest
• Transfer this amount to line 10 of Form 1040 Schedule A
• If any of your points were not included on Form 1098, enter the additional amount you paid on line 12 of Form 1040 Schedule A

For many taxpayers, the process really is this simple. In some cases, though, calculating and deducting mortgage points can be tricky. With TurboTax, just answer a few simple questions and we can help you get the proper deduction for your mortgage points.

@CobolCJava​​​​​​​