Loans |
Mortgage — Homeowner Tax Savings
Deduct Your Discount Points
Ok, you already know that home mortgage interest payments (including refinance loans and home equity loans and lines of credit) give you a nice tax break by letting you deduct your mortgage interest payments. But did you know that you can also deduct a portion of any points you pay when you are closing your home loan?
A point is an amount that you pay to a lender up front in return for a lower interest rate on your loan. Each point is one percent of the amount of the loan. If you plan to stay in your property and keep your loan for a long time, paying points to get a lower rate may save you money over the life of the loan.
If you pay points when you get a new loan, a part the amount of money paid can be deducted from your taxes each year over the life of the loan. For example, if you get a 30-year fixed mortgage, 1/30th of the money paid in points can be deducted from your taxes each year - this is in addition to the total interest paid on that loan for the year.
Don't forget to take the full deduction for both the interest and the points!
