Where and how to allocate lender credit with Home Office Refi

[Aa79]

I refinanced my home where I have home office for my business. I paid 9K for point, received 6k as lender credit. The deductible closing cost with refi was 2.5K without lender credit and it was no cash-out refi.

If there was no lender credit, I know I can deduct 9K point in Sch A and depreciate 2.5K closing cost over the 39yr as bldg. With 6K lender credit, I'm lost and not sure where and how to allocate. Should I decrease Sch A point deduction to 3K (=9k-6k) or should I decrease the building basis by 3.5k (=6k-2.5k)?

[tagteam]

See https://www.irs.gov/taxtopics/tc504

I am not sure what you are asking but you deduct points ratably over the life of the loan

[NCperson]

@Aa79 

1) how much were the points? 9k

2) how much were the closing costs? 2.5k

3) how much was the lender credit? 6k

as it is not clear what the lender credit is for, it would be ratioanal and justifiable to prorate the $6k against the points and closing costs.  That would mean 78% (9/11.5) of the $6k would be applied to the points, or $4.7k and then $1.3 would be applied to the closing costs.  Who could argue with that? 

The closing costs of $2.5k-1.3k are not deductible items.

The points of $9k-$4.7k or $4.3k are deductible over the life of the mortgage. They are NOT deductible in one year. 

https://www.irs.gov/taxtopics/tc504

note the 9 requirements at this link to take a deduction for the points in one year.  Since this is a refi, it fails #7, therefore it must be amortized ratably over the life of the loan.

(and I took your comments on 'home office' to mean you use a portion of your home as a 'home office;)