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Mortgage Points

Home mortgage points are certain charges you pay to obtain a home mortgage. Points are usually charged based on a percentage of the loan amount. In some cases home mortgage points are deductible in the year you paid them, as an itemized deduction.

Deduction Guidelines

All of the following conditions must be met for your home mortgage points to be fully deductible in the year you paid them:

  • Your loan must be secured by your main home.
  • Paying points must be an established practice in your area.
  • The points you paid were not more than what is generally paid for points in your area.
  • You use the cash method of accounting; that is, you report income and deductions in the year they occurred.
  • The points were not paid for items generally separated on the settlement sheet.
  • You must have paid the points at or before closing with funds not from your lender or mortgage broker.
  • You must have obtained a loan to buy or build your main home.
  • The points were computed as a percentage of the mortgage principal.
  • The points amount is shown on your settlement statement.

If you cannot meet all of the guidelines for points to be deductible in full, you may be able to deduct the points over the lifetime of your mortgage. Second home mortgage points are deductible over the lifetime of the loan, instead of only the year they were paid.

Refinancing Points

Points paid to refinance an existing mortgage are usually deducted over the life of refinance loan. However, if part of the refinanced mortgage is used to make improvements to your main home, and you meet the first six requirements in the deduction guidelines, you can fully deduct the part of the points related to the improvements in the year you paid the points.

Non-Deductible Points

  • Points charged for specific services such as appraisal, inspection, title and attorney fees, and property taxes
  • Points paid if you were the seller of the home
  • Points paid to obtain a mortgage for a second home


Publication 530 – Tax Information for Home-Owners

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