Mortgage Points

Forum|Forum|6 years ago
March 31, 2020
2 replies
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I helped my daughter buy a home. I paid all points and co-signed on the loan. I wanted to deduct points, but Turbo Tax is treating this as a second home for me and says I must amortize points over life of the loan. Is there a way for me to deduct all the points paid at once?

NCPERSON1

maybe you answered some fo the questions incorrectly???

https://turbotax.intuit.com/tax-tips/home-ownership/how-to-deduct-mortgage-points-on-your-tax-return/L1tUJ03Hz

DMarkM1

According to IRS Topic 504: "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.

You can also fully deduct (in the year paid) points paid on a loan to improve your main home if you meet tests one through six above.

Points that don't meet these requirements may be deducted ratably over the life of the loan."

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Clifton_P

Thank you Sir, Now if you could just cross the finish line by telling me what to do next in Turbo Tax now that I meet all the circumstances. Thank you.