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If Form 1098 box 3 shows a refund of overpaid interest, do not reduce the deduction by the refund. Instead, see the instructions on Form 1098 for box 3.
Points are shown on the taxpayer's settlement statement. Points paid only to borrow money are generally deductible over the life of the loan. See IRS Publication 936 to figure the amount the taxpayer can deduct. Points paid for other purposes, such as for a lender’s services, are not deductible.
If the taxpayer used part of the proceeds to improve his or her main home, you may be able to deduct the part of the points related to the improvement in the year paid. See Publication 936 for details.
If the taxpayer paid off a mortgage early, deduct any remaining points in the year he or she paid off the mortgage.
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Amortized Points On the Schedule A
Home Mortgage Interest and Points from Form 1098
Enter the amount of home mortgage interest and points reported on Form 1098 if you have not entered it elsewhere in the return. For limitations on the amount of home mortgage interest that the taxpayer can deduct, press SHIFT+F1 for the IRS instructions, and also see IRS Publication 936.
Generally, points reported in box 2 of Form 1098 are deductible in the year paid. See the instructions on the back of Form 1098 for more information.
If Form 1098 box 3 shows a refund of overpaid interest, do not reduce the deduction by the refund. Instead, see the instructions on Form 1098 for box 3.
Points Not Reported on Form 1098
Enter the amount of points not reported on Form 1098. If you are amortizing points over the life of the loan, link to a Depreciation Worksheet from this field. On the Depreciation Worksheet, fill in the description, date placed in service (date of loan), cost or basis (amount paid for points), method (select AMORTIZ), and recovery period (length of loan). Sure-Fire calculates the deductible amount and sends it to this field.
Points are shown on the taxpayer's settlement statement. Points paid only to borrow money are generally deductible over the life of the loan. See IRS Publication 936 to figure the amount the taxpayer can deduct. Points paid for other purposes, such as for a lender’s services, are not deductible.
Refinancing
Generally, taxpayers must deduct points paid to refinance a mortgage over the life of the loan. This is true even if the new mortgage is secured by the taxpayer's main home.
If the taxpayer used part of the proceeds to improve his or her main home, you may be able to deduct the part of the points related to the improvement in the year paid. See Publication 936 for details.
If the taxpayer paid off a mortgage early, deduct any remaining points in the year he or she paid off the mortgage.
Tags: federal,form