| Many people get confused about how to treat points, so I hope this post is helpful. In this blog, I am focusing particularly on what to do when the Points are Paid by the Buyer. For Points Pre-Paid by the Seller, read my previous blog... |
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A point is interest that has been pre-paid in an effort to "buy down" the fixed interest imposed on a mortgage.
In a property SALE (not refinance), if Points are Paid by the Buyer:
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If you are the BUYER:
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For Personal Property
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For Rental Property
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| Deduct all points as mortgage interest on Schedule A |
Deduct points over the life of the loan on Schedule E |
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| Keep in mind, this post is regarding points paid on the sale of property. Points paid during a refinance are treated differently. As always, consult with a tax advisor to be on the safe side. |
To learn more about all the different ways to save money on real estate investments, visit our sites.
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Niman Singh |
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