The amount paid as points doesn't exceed the normal rate charged in your area. The points are paid on a loan to purchase or build your principal residence, and your residence secures the loan. Your down payment must at least equal the amount of seller-paid points you are deemed to have paid. Your basis in your home is reduced by the amount of deductible seller-paid points. Similarly, the seller's sales price is reduced by this amount.
Some new homeowners can fully deduct points paid on home mortgage loans in the year paid.
After explaining the requirements that must be met, this tax tip considers the deductibility of points paid for a variety of different home loans. Don't assume you won't qualify for this deduction because the seller paid your points. As this tax tip explains, there is a good possibility that you still qualify for this deduction. All rights reserved. All rights reserved.