When you buy a house, you get to deduct in one fell swoop the “points” fee paid to get your mortgage. In exchange for paying points up front, the lender reduces the interest rate on your loan.
When you refinance, though, you have to deduct the points paid on the new loan over the life of that loan. That means you can deduct 1/30th of the points annually if it's a 30-year mortgage. That's $33 a year for each $1,000 of points you paid—not much, maybe, but don't throw it away. Even more important, in the year you pay off the loan—because you sell the house or refinance again—you get to deduct all as-yet-undeducted points.
There's one exception: If you refinance a refinanced loan with the same lender, you add the points paid on the latest loan to the leftovers from the previous refinancing, then deduct that amount gradually over the life of the new loan. A pain? Yes, but at least you'll be compensated for the hassle.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
See more tax tips for your 2016 return:
Out-of-Pocket Charitable Deductions
-
-
Should I Trade Stocks or Options?
Answering the question "should I trade stocks or options" will depend on your own risk tolerance, investing objectives and understanding of market dynamics.
-
This Is How You Can Be a Snowbird in Retirement
There’s a lot to consider, and warm weather shouldn’t be the only deciding factor. For instance, will you rent or buy? What’s the tax and health care situation?
-
IRS Promises Fewer Audits of Earned Income Tax Credit Claims
IRS Audits After years of auditing some taxpayers with lower incomes at higher rates, the IRS says it’s making a change.
-
How Much Will You Save Under the Arkansas Tax Cut Bill?
State Tax Another Arkansas tax cut bill means more tax cuts, but how much money will you save with the new changes?
-
IRS Won’t Process New Employee Retention Credit (ERC) Tax Credit Claims in 2023
Tax Credits Due to an alarming amount of fraud, the IRS has stopped processing new ERC tax credit claims.
-
Do You Qualify for a Michigan Home Heating Tax Credit?
State Tax Time is almost out to apply for the Michigan Home Heating Tax Credit. Here’s what you need to know about eligibility and filing your application.
-
Tax Tips for National Preparedness Month
Disaster Preparedness September is National Preparedness Month. These tips can help you secure important documents and information — before a disaster happens.
-
Georgia Gas Tax Suspended by Gov. Kemp Due to Inflation
Gas Tax Georgians will get a break from paying fuel tax at the pump now that Gov. Kemp has declared an inflation state of emergency.
-
South Carolina Tax Relief Following Tropical Storm Idalia
Tax Deadlines The IRS has granted tax deadline relief to South Carolina taxpayers impacted by Tropical Storm Idalia. Here’s everything you should know.
-
Maryland Student Loan Tax Credit Deadline Approaching
State Tax You’re almost out of time to apply for the Maryland student loan tax credit. Here’s everything you need to know.
