Can I claim refinance costs that are then rolled into the mortgage?

jglawrence · ‎June 4, 2019

I.e. for a zero-closing cost lender. The costs still exist, but they are rolled into the mortgage instead of paying them outright at closing.

DianeW · ‎June 4, 2019

Yes, see the information contained below also.

If there were points or loan origination fees see the rules here for a refinanced loan.

If there are loan origination fees on a refinanced loan they will have to be amortized over the life of the loan to the extent there was not additional funds used to buy, build or improve the home. If extra money was borrowed to buy, build or improve the home the points attributable to that portion can be deducted in the year of the refinance, while the rest of the points should be deducted over the life of the mortgage each year until it ends.
Loan or mortgage ends. If your loan or mortgage ends, you may be able to deduct any remaining points (OID) in the tax year in which the loan or mortgage ends. A loan or mortgage may end due to a refinancing, prepayment, foreclosure, or similar event. However, if the refinancing is with the same lender, the remaining points (OID) generally are not deductible in the year in which the refinancing occurs, but may be deductible over the term of the new mortgage or loan. Simply divide the total or adjusted amount by the number of months of the life of the loan. This needs to be tracked until the loan is paid off.

DianeW · ‎June 4, 2019

Yes, see the information contained below also.

If there were points or loan origination fees see the rules here for a refinanced loan.

If there are loan origination fees on a refinanced loan they will have to be amortized over the life of the loan to the extent there was not additional funds used to buy, build or improve the home. If extra money was borrowed to buy, build or improve the home the points attributable to that portion can be deducted in the year of the refinance, while the rest of the points should be deducted over the life of the mortgage each year until it ends.
Loan or mortgage ends. If your loan or mortgage ends, you may be able to deduct any remaining points (OID) in the tax year in which the loan or mortgage ends. A loan or mortgage may end due to a refinancing, prepayment, foreclosure, or similar event. However, if the refinancing is with the same lender, the remaining points (OID) generally are not deductible in the year in which the refinancing occurs, but may be deductible over the term of the new mortgage or loan. Simply divide the total or adjusted amount by the number of months of the life of the loan. This needs to be tracked until the loan is paid off.