Checklist Tax Deductions
April 26th, 2009
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Question: Clarification on tax deduction for mortgage points not reported on 1098?
Hi,
Bought a new house that is my primary residence. Paid loan origination fee of $x to mortgage broker (say BankA) and loan discount fee of $y to lender (say BankB). Both these fees are shown in section 800 of settlement statement. Per checklist in pub 936 and discussion w/ IRS agent, was told that I could take deductions for amounts $x and $y as points not reported on 1098 while filing taxes.
After hanging up with IRS agent, noticed section 200 of settlement statment showed “broker credit” paid by BankA equal to loan discount fee $y. In other words, BankA paid loan discount fee to BankB, essentially reducing my closing cost.
My confusion/question is whether I can include $y as deduction for points not reported on 1098?
Would appreciate any input.
Thank you,
-Topper
Answer: You’re allowed to take all interest payments on your home loan AND all prepaid interest AND all points (same thing, really) from both banks whether they report it to you or not.
You can probably find the information in your purchase agreements.
All of these amounts are recorded on schedual A in the “interest” section. (You’re allowed all interest charges on a first and second home, and also on a limited amount for an equity loan on top of your mortgage).
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