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[[Can I deduct any points that the lender pays on my refinance? This is my first
time refinancing.]]

Be very careful when you hear the words "lender pays". In most cases, it doesn't mean anything more than the lender will FINANCE those expenses. You don't have to pay for them "up front", out of your pocket, but you DO have to pay for them...over the term of 30 years. And you'll also pay interest on theses "lender pay" expenses.

So make sure you know what you are REALLY doing before you jump into an empty pool.

As far as the points issue, if the lender REALLY pays them on your behalf, and you don't pay 'em either now or in the future (i.e., they are not simply financed), then you have no deduction because YOU didn't pay the points.

But if you find that the lender is simply financing the points (which I would certainly guess), then you would be able to amortize the points over the live of the loan (30 years in your example), and you would be able to deduct 1/30th of the total points over the next 30 years.

And that would remain so unless or until you paid the loan off or otherwise refinance this loan with another loan. At that time, you would then be able to take any unamortized interest and deduct it in the year that the loan is paid off completely.

For additional reading on this issue, see IRS Publication 936 on the IRS web site.

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