Question

Points

Forum|Forum|6 years ago
February 18, 2020
3 replies
0 views

I purchased my home on 5/10/2019. The tax program note states "If you purchased your home in 2019 or refinanced it to make improvements, we'll deduct all of your points on your current return rather than amortize them over the life of the loan"

My Turbo Tax product will not permit me to take the total deduction for points and insist on amortizing my points. How do I correct this?

VictoriaD75

Follow these steps to add points paid:

Under the Federal menu, choose Deductions & Credits
Click Edit/Add next to Mortgage Interest and Refinancing (Form 1098)
Click Review next to the correct lender
Verify the lender, click Continue
Answer the question Do any of these uncommon situations apply, click Continue
Verify the entries on the 1098 (this does not include the points) and click Continue
Now you are at the points screen, answer the question appropriately. You will likely choose the first option, We paid points... The mortgage origination date is know based on the information entered on the previous screen for the 1098. Click Continue
On this screen, provide the information about the points you paid. Click Continue.

The tax treatment of these points will depend on the loan. If such points paid on a mortgage were for the purchase or improvement of a personal residence, they may be deducted in the year they are paid. Points paid to refinance a home mortgage are not deductible when paid, but must be capitalized and the deduction spread over the life of the loan (amortized). Points charged for specific loan services, such as the lender's appraisal fee and other settlement fees, are not deductible.

Home Mortgage Points

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S

SoCalSilver

So, where do you enter points that are not on Form 1098, but rather are listed on the Settlement Statement?

M

MayaD

To deduct Points follow the steps below:

Log in to your account .
Go to Federal Taxes.
Go to Deductions and Credits.
Select Review next to Mortgage Interest and Refinancing (Form 1098).
Select Edit next to the lender.
Continue until you get to the screen Did you pay points in 20xx when you took out the loan?

Can I deduct mortgage points? - Community

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R

rgcook12

I have the same software issue with points. It will not allow me to enter the points paid for 2019.

VictoriaD75

If you have followed the steps above and are not able to enter points, you may want to delete the original entries and re-enter.

Under Tax Tools, choose Tools
Choose Delete a Form
Scroll through your return until you find Form 1098 or Home Mortgage Interest Worksheet, click Delete to the right of the form
Confirm that you wish to delete the form

Return to the steps in the previous post to re-enter.

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H

HoneyBadger6198

This is not correct. To make this work you have to add the points paid to the interest paid. In order to determine if you can legally do so, follow these IRS rules:

Points are allowed to be deducted ratably over the life of the loan or in the year that they were paid. You can deduct the points in full in the year you pay them, if you meet all the following requirements:

Your main home secures your loan (your main home is the one you live in most of the time).
Paying points is an established business practice in the area where the loan was made.
The points paid weren't more than the amount generally charged in that area.
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.
The points paid weren't for items that are usually listed separately on the settlement sheet such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes.
The funds you provided at or before closing, including any points the seller paid, were at least as much as the points charged. You can't have borrowed the funds from your lender or mortgage broker in order to pay the points.
You use your loan to buy or build your main home.
The points were computed as a percentage of the principal amount of the mortgage, and
The amount shows clearly as points on your settlement statement.

K

karwine

This is still not working. I tried deleting the form and readding the data and there still seems to be a bug. The worksheet shows that the points are deductible but it doesn't flow through to the Schedule A. I checked my copy of TT2018 (Premier) and TT2019 (Premier) and neither work. Please advise.

K

karwine

I ended up just adding the points to the mortgage interest field to get it to flow through to the return.

Note for the product team: there also seems to be a bug with adjusting the interest for large loans (over 750k). When you the loan balances, the interest is correctly adjusted, but changing any of those numbers later on or deleting the mortgage interest forms and re-adding, will not allow for re-calculations. I had to go to a specific form (Tax & Int Wks) and delete the adjusted interest that was calculated the first time I input the numbers.

AmyC

Employee

You can add the point to the mortgage interest if you qualify for the full deduction. For full details, Instructions for Schedule A (Form 1040), see page A8.

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