Mortgage points

[dz9]

I entered the dollar amount of mortgage points paid (over $1000), but the deduction allowed is only $30. Why is this the case?

[RaifH]

Mortgage points are amortized 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. 

You must amortize the points for a refinance unless you refinance solely to pay for an improvement to your home. TurboTax will automatically calculate the correct deduction based on the points paid and the length of the loan.  

[Trvls2Much]

RaifH - your reply does not address the question.   I have the same problem.  IRS says I'm allowed to deduct all the points for my new primary home loan in the year I paid them (not amortized over the life of the loan).  TurboTax is not following the IRS rules - it is forcing amortization even when I meet all the requirements to fully deduct the points.

[Carl]

@RaifH that's not true for one's primary residence.

When financing/refinancine one's primary residence, points are fully deductible in the year of finance/refinance. The amortization requirement applies to business use property, including residential rental real estate.

For the amount one can fully deduct in that year, it can be affected if one refi'd with a cash out. But there's a number of factors that come into play. Won't cover that here, since there's not enough information provided to know if "other factors" even exist.

[pappatho]

I'm seeing a similar thing. I paid over $1000 in points for a first mortgage on y primary residence purchase. I believe I qualify to have it all deducted this year instead of amortized.

[PatriciaV]

@pappatho

You should check the second box for "I bought or improved my main home in 2021" in order to deduct all the points this year. Note the instructions say to check all that apply.