Mortgage points and cost

[camikasi]

I had a mortgage with origination date in 2011. I paid $5000 in points and cost. The deductions on the $5000 where spread out to the life of the loan, this means I  had deductions on a total of $1670 over the last 10 years.

In the beginning of 2021 I refinanced. How can I claim deductions on the rest of the $5000 ($3330)?

[LeonardS]

If you refinance with a new lender, you can deduct the remaining mortgage points when you pay off the loan. However, if you refinance with the same lender, you must deduct the remaining points over the life of the new loan.

[camikasi]

How do I enter this deduction in TurboTax?

[Carl]

Assuming you refinanced with a different lender, and assuming this is rental property or some other type of business property:

DEDUCT FINANCING FEES OF OLD LOAN WHEN REFINANCING

In the Assets/Depreciation section for that rental property, elect to edit/update the entry for your points.

- On the "Review Information" screen click Continue.

- On the "Did you stop using this asset 2021?" screen, click YES.

- On the "Disposition Information" screen, in the disposition date box enter the date you closed on the new loan. Then click Continue.

 - On the "Special Handling Required?" screen, click YES.

- On the "Depreciation Deduction Amount" screen, select Transfer These Fees For Me To Other Expenses. Then click Continue.

You'll see the remaining fees of the old loan to be deducted in the Rental Expenses section, very last screen of that section. The entry will start with "Unrealized Refinancing Fees...."

[camikasi]

These steps don't work for me for 2 reasons:

The loan I refinanced was for my primary residence, not a rental property. I am using Deluxe edition.

Thank you

[PattiF]

If you refinanced with the same lender, any points left over from the first mortgage will be deducted over the life of your new loan. But if you refinanced with a new lender, any leftover points can be deducted in the year of the refinance.

When you get to the Did you have any home loans? screen in the Deductions Credits section, we'll walk you step-by-step through your mortgage, including points and refinances. You will be able to add your remaining point from the loan that was refinanced with a different lender in this section. For the 1098 with the first lender, enter the total points that are remaining in the point space.

@camikasi

[Carl]

The loan I refinanced was for my primary residence, not a rental property.

Assuming the property has been your primary residence since the date of original purhcase, financing fees were fully deductible in that year of original purchase.

If it was still your primary residence in the year of the refinance, then the refinancing fees are fully deductible in the year of the refinance.

This can get more complicated if at the time of the refi, you were/are claiming a home office and/or renting out a part of your primary residence. it also gets tricky if you refinanced for a cash out, and used the cash out for the purchase of a rental or other type of business property.

[camikasi]

When I refinanced 10 years ago, TurboTax did not allow to deduct the whole points and expense amount. I was instructed to deduct it over the life of the loan. I refinanced with a new lender with an origination date of 1/20/2021. I imported my last year information, but I deleted the old bank/loan information because there were no payments made nor interest accrued on that loan for 2021. What is left is 2/3 of the points cost from loan from 10 years ago.

[KrisD15]

I was able to claim the remainder of the points this way:

Deductions & Credits

Mortgage interest

Add a Lender

Enter previous lender or bank name

Select the type of property

Select "None of the above"

Enter zero interest

zero principal and 01/01/2021 for origination date 

Continue

Yes Secured

I'm spreading the points

Loan start date 01/01/2021

Length 1 year

Dollar amount of points 

Check that the loan was paid off

[camikasi]

OK, this worked. In hindsight, I shouldn't have deleted the entry for the loan originating in 2011.