hud line #801 #802 #803

hud-1 line#801 $1070  line#802 $6446.72 line #803 $4516.72       is this tax deductible?  call lender they said because it is a refinance they did not report it on my 1098 and said my taxe preparer should know what is deductible.
  • i have the same question
Are you asking about the origination points or discount points?   If so, for a refinance they are treated differently than for a home purchase.   BTW - points and origination fees are typically treated the same way on your tax return.

You did the first thing correctly, and that was to contact the lender to see if they were included on your Form 1098...sometimes they are and sometimes they are good to check.  

On a purchase they are fully deductible on your Schedule A Itemized Deductions in the year you purchased the home.  For a refinance, generally, the points you paid to refinance your mortgage are deducted over the term of the new loan.   If you refinance your home to make substantial improvements you may be able to fully deduct the portion of points related to the improvement in the year you refinance.

So, some of it may depend on the type of loan and the purpose of the funds if you refinanced to get cash out.  There are some great Q&As at this link that might be helpful to you as well:
This answers some questions, but not if the number is negative for line 802.
  • The answer above (the taxslayer link) is the best I have seen with regards to this question.  This question has been asked dozens of times and, In general, the many other answers are confusing at best and some are just wrong.  Check this out out.   ron in round rock
From IRS Pub 530 - I believe the right answer for deducting HUD line # 801 is NO!
The term “points” is used to describe certain charges paid, or treated as paid, by a borrower
to obtain a home mortgage. Points also may be called loan origination fees, maximum loan
charges, loan discount, or discount points. A borrower is treated as paying any points
that a home seller pays for the borrower's mortgage. See Points paid by the seller, later.
General rule. You cannot deduct the full amount of points in the year paid. They are prepaid
interest, so you generally must deduct them over the life (term) of the mortgage.
Exception. You can deduct the full amount of points in the year paid if you meet all the following
tests.  SEE #9 below
1. Your loan is secured by your main home. (Generally, your main home is the one you 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 Page 4 Publication 530 (2012) 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.
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 Uniform Settlement Statement, Form HUD1) as points charged for the mortgage. The points may be shown as paid from either your funds or the seller's.Note. If you meet all of the tests listed above and you itemize your deductions in the year you get the loan, you can either deduct the full amount of points in the year paid or deduct them over the life of the loan, beginning in the year you get the loan. If you do not itemize your deductions in the year you get the loan, you can spread the points over the life of the loan and deduct the appropriate amount in each future year, if any, when you do itemize your deductions
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