On my 1098 box 6 has a dollar amount. Is this my property taxes?

[Cynthiad66]

@mrclhendrix -  Unless it specifically says Property Taxes, it is not.  Box 6 on the one I am looking at says points.  Your property taxes may be in bo 10 or listed elsewhere on the statement.

If you have Points, they are also deductible.

Points are prepaid interest and may be deductible as home mortgage interest, if you itemize deductions on Schedule A (Form 1040), Itemized Deductions. If you can deduct all of the interest on your mortgage, you may be able to deduct all of the points paid on the mortgage.

[Carl]

Box 6 is points - which is basically pre-paid interest. If this is on your primary residence, they're fully deductible as a SCH A itemized deduction. You can include that amount in your mortgage interest paid.

Otherwise, if this is on rental property or other business use property, those points are amortized and deducted (not depreciated) over the life of the loan.

ENTERING POINTS

here's how to enter the points in the Assets/Depreciation section of SCH E.. (does not apply to entering the property itself, or any other property assets.)
- Select the Add and Asset button. (go straight to the asset summary if presented that option)
- Select Intangibles/Other Property, then continue.
- Select Amortizable Intangibles, then continue.
- Describe it as something like "2021 Financing Fees".  Then enter the amount, and the closing date of the loan. Then continue.
- Select "purchased new", then "100% business use", enter the closing date of the loan (again), then continue.
- Code section is 163:Loan Fees, then continue.
- Useful Life in Years is the length of the loan, then continue.
- You can "show details" if you like. Then continue, and that does it

[sergio2339]

Would this points be on a schedule E when a property in the future is converted from *primary* to rental? Or they are useless unless it was purchased as a rental in the first place. 

[sergio2339]

I guess I man if they would be amortized or deducted once the property starts being rented 

[AmyC]

The points from purchase would be added to the cost basis. Once the house becomes a rental, you will depreciate it on the lower of FMV or cost basis. Be sure to keep track of your cost basis and depreciation along with any disallowed carryover losses each year.

@sergio2339 

[sergio2339]

Where in TurboTax do I add the points for the cost basis. It doesn’t ask it anywhere 

[AmyC]

When you enter the house as an asset to be depreciated, it will ask for the basis, use your notes to determine your basis in the house.

You need to have a notebook, digital or paper, with the purchase of the house, closing statements, improvements, all the things before you start rental. Once you begin renting, expenses will go under the appropriate section on Sch E. Before rental, allowed expenses go into the basis for depreciation. You will need to keep all paperwork and tax returns until you sell the house plus 3 years. 

See more in Pub 527.

@sergio2339 

[sergio2339]

Thank you for the responses. Means a lot. Lastly, my HOA charges me an annual leasing fee, and since I moved out, they charged me a move out fee and a move in fee once the tenant moved in.

I did not charge any of those to the tenant. Would all those be included as HOA deductions for the rental? 

Thanks again!!!

[AbrahamT]

Absolutely, if they are charged by the Homeowners Association, then they are a dedutible epense on your Sch E. To enter this information, see HERE