Several years ago, the IRS liberalized the rules for deducting these one-time mortgage fees when purchasing a principal residence. The revised rules eliminated the longstanding requirement that a buyer could deduct the points in a lump sum only if the fees were paid in cash using nonborrowed funds. As a result, you're now allowed to write off the points in a lump sum even if you borrow the money or have the points tacked onto your mortgage balance. The only proviso is that your down payment and any other cash payments made at closing be at least equal to your points charges.
Most homeowners easily pass that test.
Normally, you can't deduct an expense that someone else paid. But the IRS does allow homebuyers to deduct points that were paid for them by the seller. Several years ago, the IRS reversed its longtime position that buyers could only deduct points they personally paid. Not necessarily, according to a recent IRS private letter ruling. If you can't deduct the points on your tax return that year because you're claiming the standard deduction, the IRS ruling provides a way to deduct the points on future returns at least in those years when you are able to itemize.