Question

Deducting Points on a 2021 refinance, but home improvements won't be made until 2022

Forum|Forum|4 years ago
March 15, 2022
1 reply
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We purchased our home in Oct 2014, we did a cash out refinance in Jan 2020 planning to use the cash to remodel our home. Due to design issues and then permit delays we are just beginning the work in April 2022. Given the falling interest rates and surging equity, we refinanced again in May 2021, taking out a small amount of additional funds to use for the remodel and paying points to secure the lowest interest rate. All of the money taken out in both refinances have been in a savings account and will all be used on the remodel occurring now. To deduct all of the points, it is asking me whether the money was used to make improvements on the home in 2021, when I answer no it is amortizing the points paid across the life of the loan. Do I have any options to deduct the full points now? I did pay for some things in 2021 like permits and interior design.

P

PattiF

You can answer yes to the question that all of the money was used to make improvements on the home in 2021. This question is asked to see if any cash was withdrawn for other purposes than substantially improving your home. You did not take any cash out and will be using all of the funds for home improvement.

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