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Real Estate S
Eileen M. Day REALTOR
CAN YOU DEDUCT POINTS?
In most cases, points (loan origination fees charged by lenders) are a substitute for interest that would be charged over the life of the loan. They could be considered a form of prepaid interest. A lender charges points, or an additional fee up front, to the borrower Instead of a higher interest rate over the full term of the loan.
Generally, prepaid interest Is not deductible before the year to which the Interest Is allocable. However, you may deduct points in the year you pay them under the following conditions:
First, they must be paid from separate funds on a loan Incurred in connection with the purchase of your principle residence. To qualify, the charging of points must reflect the established practice of lenders in the area where the loan is obtained. Further, the amount charged for points must not be greater than the number of points usually charged in the area for a similar kind of loan. Tax treatment for refinancing points are not the same. Consult your tax advisor.
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. We're here to help.
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