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arrambide1
New Member

Where do I deduct my home refinance loan origination fees?

I refinanced my home in 2016, and my loan fees were $3520.  Where do I enter this amount for deduction?
1 Reply
JenniB
Level 4

Where do I deduct my home refinance loan origination fees?

Not all origination fees qualify but the original fee is generally deductible and are also be called "points".

To report it:  

Federal>Deductions & Credits>Your Home> Mortgage Interest, Refinancing, and insurance (Form 1098)

See IRS pub 936 to see what fees are deductible: https://www.irs.gov/publications/p936/ar02.html

You can fully deduct points in the year paid if you meet all the following tests. (You can use Figure B as a quick guide to see whether your points are fully deductible in the year paid.)

  1. Your loan is secured by your main home. (Your main home is the one you ordinarily live in most of the time.)

  2. Paying points is an established business practice in the area where the loan was made.

  3. The points paid were not more than the points generally charged in that area.

  4. You use the cash method of accounting. This means you report income in the year you receive it and deduct expenses in the year you pay them. Most individuals use this method.

  5. The points were not paid in place of amounts that ordinarily are stated separately on the settlement statement, such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes.

  6. The funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged. The funds you provided are not required to have been applied to the points. They can include a down payment, an escrow deposit, earnest money, and other funds you paid at or before closing for any purpose. You cannot have borrowed these funds from your lender or mortgage broker.

  7. You use your loan to buy or build your main home.

  8. The points were computed as a percentage of the principal amount of the mortgage.

  9. The amount is clearly shown on the settlement statement (such as the Settlement Statement, Form HUD-1) as points charged for the mortgage. The points may be shown as paid from either your funds or the seller's.

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