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Real Estate CgJ
Eileen M. Day REALTOR
LOAN POINTS DEDUCTIBLE
Loan discount points that buyers pay to secure mortgage financing count as tax deduct ible items. The IRS has reserved this tax advantage of home ownership mainly for buyers of primary and second homes. The total sum of the points paid at closing can be deducted from the buyers taxa ble income for the year in which the purchase was made.
Each point equals one per cent of the outstanding loan therefore paying 2 points on a $100,000 loan amounts to $2,000. That's not chopped liver when it comes adding up personal tax deductions.
Although the dollar value of points is deductible when buy ing a home, the money paid for points when refinancing an existing mortgage is a different story. People who have reti nanced existing mortgages (usually to get a lower interest rate) cannot fully deduct the points charged in connection with obtaining that new loan. In those cases, the amount paid for the points must be amortized (or “stretched’) over the full period of the loan.
If there is anything we can do to help you in the field of real estate please stop in at EILEEN M. DAY. Realtor. The Clopton House, Washington, Va. 22747 Phone 675 3033. Were here to help.
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