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OP: <<<<So, if I didn't actually PAY the points, then can I still amoritize them?>>>>

"Let's rephrase this: Can I deduct the points twice if I rolled them into the loan? Guess what the answer is.

Since you rolled the points into the loan, they're already amortized for you in your regular loan payments. The operative word for deductibility is "paid," and since you didn't pay any points, you have nothing to amortize on top of your loan payments."


OP: <<<<What if I paid points when I refinanced, but the points were rolled back into the loan amount? In other words, I didn't actually PAY them.>>>>

I'm going to do one of my rare disagreements with Phil - sort of. I think we have different points of view on your facts. Once we nail those down, we'll probably agree on the tax treatment.

I will side with Peter and also have a rare disagreement with Phil.

If I understand the OP, the OP paid points but paid them with borrowed money. So far as I understand the rules, that does not change the deductability of such points.

In this case the funds were also borrowed from the mortgage lender, but I do not see why that fact, alone, would change the answer. If the OP had paid the points by using a convenience check issued by a CC company, would anyone doubt that the OP paid points and that they were deductible (amortized over life of loan because this was a refiance)?

And the amortization of the loan would show the amount of the points as part of the principal paydown, so I do not see a double deduction of the points, because principal paydown is a deduction.

The one difference between borrowing from the mortgage lender (as opposed to the CC company as I posited above), should be that the interest on the money borrowed to pay the points is probably deductible -- subject to the IRS rules about interest deduction on cash-out refiances (100k above original mortgage amount and subject to $1M mortgage limit, IIRC). I will defer to Phil and Peter on these details.

Let me make sure I understand your facts. The lender charged points on your refi. They show up on your closing statement as one of the costs of the refi. There are no "broker credits" or anything like that on your closing statement. The principal amount of your new loan is larger than your old loan to have the funds to pay the various refi costs.

If these are your facts, you did indeed pay the points. (Or maybe more correctly, you WILL pay the points - they are part of you principal payment each month.) Just because you increased the loan amount to get the funds to pay the points doesn't mean that you can't amortize them. In this case, it is NOT deducting the points twice to amortize them over the life of the loan.

However, if your broker gave you a credit, then you have to net that credit against your costs to find the actual amount of costs you did pay. And once you've done that, you may find that you didn't pay any costs after all, and you have nothing to deduct.

Sorry Phil, I concur with Peter.

Regards, JAFO

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