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two Tax questions
1.I heard that if you pay points on a mortgage, you can only deduct a percentage of the points proportional to the number of years you hold your mortgage.
2. I also heard that IF you pay off a mortgage (i.e., refinance) that you paid points on, the remainder of the points are deductible in the year you paid the mortgage off. But I can't find this info in any tax forms.

You are very close to being correct. The correct way to express point (1) is that you must prorate the points over the life of the mortgage. The difference between what I wrote and what you wrote occurs in the first and last years of the mortgage. If you took out your 30 year mortgage on July 1, you are only entitled to deduct 1/2 x 1/30 = 1/60 of the points on your first tax return. You will deduct the last 1/60 of the points on the last (31st) tax return.

There is also an exception. If the mortgage was taken out to acquire (not a refinancing) your principal residence and certain other requirements are met, you have the option of deducting all of the points in the first year.

You are correct in point (2). If you pay off your mortgage early, any remaining points are deductible in the year when you pay off the mortgage.

This information can be found (briefly) in the instructions for Schedule A, line 12. Reference is made to and you may want to grab a copy of IRS Pub. 936, Home Mortgage Interest Deduction for the full rules. It can be found at


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