Rush to Close on Mortgages and Refinancing

Closing on your mortgage or refinancing an existing loan by December 31 could earn you a big deduction on your 2010 return.

Weak housing prices may be a seller’s nightmare, but they’re a boon for buyers able to scoop up a bargain. Although most expenses connected with buying a home are not deductible, there's a big exception when it comes to points paid to get a mortgage. Each point is 1% of the mortgage amount. So if you pay two points on a $200,000 mortgage, that's $4,000.

When the house you're buying is your principal residence, the entire expense is deductible in the year you pay it. And get this: You're permitted to deduct the points even if you persuade the seller to pay them for you.

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Mary Beth Franklin
Former Senior Editor, Kiplinger's Personal Finance