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Are Mortgage Points Tax Deductible?

When you took out a mortgage to buy your home did you pay points?  You may be able to deduct that prepaid interest on your federal tax return--but only if you meet a long list of rules.

The points you paid when you signed a mortgage to buy your home may help cut your federal tax bill. With points, sometimes called loan origination points or discount points, you make an upfront payment to get a particular rate from the lender. Since mortgage interest is deductible, your points may be, too.
If you itemize your deductions on Schedule A of IRS Form 1040, you may be able to deduct all your points in the year you pay them. Some high-income taxpayers have their total itemized deductions limited, including points. You can read more about that in the instructions for Schedule A. Lucky for you, the IRS doesn’t care whether you or the homesellers paid the points. Either way, those points are your deduction, not the sellers’. Tip: Tax law treats home purchase mortgage points differently from refinance mortgage points. Refinance loan points get deducted over the life of your loan. So if you paid $1,000 in points for a 10-year refinance, you’re entitled to deduct $100 per year on your Schedule A. The Fine Print for Deducting Points The IRS rules for deducting purchase mortgage points are straightforward, but lengthy. You must meet each of these seven tests to deduct the points in the year you pay them. 1.  Your mortgage must be used to buy or build your primary residence, and the loan must be secured by that residence. Your primary home is the one you live in most of the time. As long as it has cooking equipment, a toilet, and you can sleep in it, your main residence can be a house, a trailer, or a boat. Points paid on a second home have to be deducted over the life of your loan. 2.  Paying points must be a customary business practice in your area. And the amount can’t exceed the percentage normally charged. If most people in your area pay one or two points, you can’t pay 10 points and then deduct them. 3.  Your points have to be legitimate. You can’t have your lender label other things on your settlement statement, like appraisal fees, inspection fees, title fees, attorney fees, service fees, or property taxes as “points” and deduct them. 4.  You have to use the cash method of accounting. That’s when you report your income to the IRS as it comes in and report your expenses when you pay them. Almost everybody uses this method for tax accounting. 5.  You must pay the points directly. That is, you can’t have borrowed the funds from your lender to pay them. Any points paid by the seller are treated as being paid directly by you. In addition, monies you pay, such as a downpayment or earnest money deposit, are considered monies out of your pocket that cover the points so long as they’re equal to or more than points.  Say you put $10,000 down and pay $1,000 in points. The downpayment exceeds the points, so your points are covered and therefore you can deduct them if you itemize. If you were to put nothing down but you paid one point, that $1,000 wouldn’t be deductible. 6.  Your points have to be calculated as a percentage of your mortgage. One point is 1% of your mortgage amount, so one point on a $100,000 mortgage is $1,000. 7.  The points have to show up on your settlement disclosure statement as “points.” They might be listed as loan origination points or discount points. Tip: You can also fully deduct points you pay (for the year paid) on a loan to improve your main home if you meet tests one through five above. Where to Deduct Points Figured out that your points are deductible? Here’s how you deduct them: Your lender will send you a Form 1098. Look in Box 2 to find the points paid for your loan. If you don’t get a Form 1098, look on the settlement disclosure you received at closing. The points will show up on that form in the sections detailing your costs or the sellers’ costs, depending on who paid the points. Report your points on Schedule A of IRS Form 1040. There are two things related to points that you can’t deduct: 1.  Interest buy-downs your builder paid Some builders put money in an escrow account (as a buyer incentive) that the lender taps each month to supplement your mortgage payment. Those aren’t considered points even though the money is used for an interest payment and it’s prepaid. You can’t deduct the money the builder put into that escrow account. 2.  Interest payments from government programs You can’t deduct points paid by a federal, state, or local program, such as the federal Hardest Hit Fund, to help you if you’re experiencing financial trouble. Source:  Visit Houselogic.com for more articles like this.  Reprinted from Houselogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.  

Are You a New Hampshire Poet?

PoetryThe Lake Sunapee Region Center for the Arts is currently seeking original poetry submissions centering on the theme "Poetry Born from Music".  For submission rules go to http://www.centerfortheartsnh.org/writing-contest-.html.  Please submit by Monday, February 16.  Judging by NH Poet Laureate, Alice B. Fogel. Two winning poets will be notified by March 31 and invited to read their poems at The Lake Sunapee Protective Association's Knowlton House at Sunapee Harbor on Friday, April 10 from 5-7pm.

Real estate markets are local, and we have the real scoop on ours. Coldwell Banker Milestone Real Estate

Looking for a Night of Music?

Sunapee Coffee HouseCome on down to the Sunapee Community Coffeehouse Friday, February 6th at 7pm to see folk singer-songwriter Cosy Sheridan.  The coffeehouse is located downstairs at the Sunapee Methodist Church, 9 Lower Main Street, Sunapee, NH.  Coffee, tea and baked goods will be available.  A hat will be passed around for donations to the musician.

Cosy Sheridan's satirical viewpoints on everyday life have earned her a place in the hearts of fans across the country. Her concerts are wide-ranging explorations of modern mythology (meet Hades the Biker), love songs for adults, contemporary philosophy for the thoughtfully-minded and her signature parody on aging and women. A former NH native, she first caught the attention of national folk audiences in 1992 when she won the songwriting contests at both the Kerrville Folk Festival and the Telluride Bluegrass Festival. West Side Folk called her "one of the era's finest and most thoughtful singer-songwriters".  

If you would like to perform, volunteer or inquire about performances, call 763-2668 or www.sunapeecoffeehouse.org

Real estate markets are local, and we have the real scoop on ours. Coldwell Banker Milestone Real Estate

A Rare and Exceptional Land Offering

The perfect combination of features with outstanding Mt. Kearsarge views across stonewall defined fields with beautiful maple trees as accents.  Southern exposure for a sunny and warm building site.  145 acres provides excellent privacy and total peace and quiet with no highway noise.  Only a short drive to Pleasant Lake or New London for shopping.  Covenants will preclude further subdivision.  Located in the quaint town of Wilmot, NH.

001smallMarilyn Kidder, Listing Broker, 603-526-4116

Known for service, trusted for results – Coldwell Banker Milestone Real Estate.

Come Up to the Great Skiing at Mt. Sunapee this Weekend!

  • Jan 30, 2015

Mt. Sunapee snowAfter a foot of new snow this past Tuesday and another 2-4 inches falling right now, the time is right to enjoy the slopes! Purchase a lift ticket for Sunday, February 1. If the Patriots win, save your lift ticket and redeem it for a half-price ticket any day for the rest of the season excluding February 14-15. Go Pats! Experience everything that Mount Sunapee has to offer. Stovepipe and Williamson, two of the most popular trails, are now open in the Sunbowl, all nine glades are open, the bump skiing on Upper Flying Goose and Lift Line is fantastic and there are four terrain parks open with more than 60 features plus the Amp Energy AirBag. All 11 lifts will be operating this weekend including the new Sunbowl Express High-Speed Quad. Now, both lifts to Mount Sunapee’s summit are high-speed quads. Family Values on-line special is available on Sundays excluding holidays through March 29, 2015. One adult full-day ticket and one dependent junior/young adult (age 6-18) full-day ticket costs only $95. A family of four can ski or ride on Sundays for $190. Family Values must be purchased in advance on their on-line store. See you on the Mountain!

You’ll be moving in the right direction with Coldwell Banker Milestone Real Estate.

Walk to the Town Docks - New Listing in Newbury, NH!

  • Jan 28, 2015

Access Lake Sunapee via the Blodgett's Landing town dock, only steps away from this partially updated three bedroom cottage.  Town sewer, views of Mt. Sunapee and the lake from the second floor.  Offered at $194,000.  Seller is a licensed NH real estate agent.

LaVigneEmily Campbell, Listing Agent, 603-526-4116

Real estate markets are local, and we have the real scoop on ours. Coldwell Banker Milestone Real Estate

Looking Back on 2014 in Area Real Estate Sales

Donna and Maxi 044The good news for 2014 was that home prices rose and the average days on market dropped. The median and average sale prices were higher in 2014 for many of the local towns and nationally, the median price will most likely be up 5.6% from 2013. Nationwide, with one month of data left to be tabulated, existing home sales are expected to finish down 3% from 2013. In this area, New London is the only town exceeding 2013 sales. Newbury – 1/1 -12/31/14                         43 Solds                 153 Days on Market (DOM) $274,000 Median Sales Price 1/1-12/31/13                          46 Solds                  159 DOM     $251,500 Median SP New London – 1/1 -12/31/14                         89 Solds                  193 DOM     $386,000 Median SP 1/1-12/31/13                          69 Solds                  208 DOM     $350,000 Median SP Sunapee – 1/1 -12/31/14                         56 Solds                  201 DOM    $317,650 Median SP 1/1-12/31/13                          57 Solds                  218 DOM   $260,000 Median SP With a strengthening economy, solid job gains, and a healthy increase in home prices, existing home sales are forecast to rise about 7% in 2015. Contact me if you would like to know the statistics for your town and how it impacts buying and selling in this market.  Donna Forest, Broker Associate, 603-526-4116, www.donnaforest.com, donna@donnaforest.com Figures are based on information from the Northern New England Real Estate Network, Inc. for the period 1/1/13 thru 12/31/13 and 1/1/14 thru 12/31/14.

“Word of Mouth” is the best advertisement, and we love it when you refer your friends and family to Coldwell Banker Milestone Real Estate.

Ready for Some Outdoor Fun - Local Hikes

  • Jan 22, 2015

snowshoeingSUNAPEE-RAGGED-KEARSARGE GREENWAY COALITION 2015 WINTER HIKES  The SRK Greenway Coalition winter hikes are free to the public. Please call the volunteer hike leader to learn starting location and time.  (E) Easy;  (M) Moderate;  (D) Difficult,  Be prepared for winter conditions: extra layers, hot drink, prepared for ice and snow.  & see www.srkg.org

JANUARY HIKES: Jan 24 (Sat) Tom Lawton (447-1995): Lunch at Mount Sunapee summit! First climb the steep Newbury Trail to cliffs over Lake Solitude. Descend the westside Summit Trail. 5.2 miles  (D) Jan 31 (Sat) Lisa Correa (518-281-1494):  The Fells trails to Lake Sunapee. Easy snowshoe (or micro-spike) walking, talking, listening for a few beautiful hours.(E) FEBRUARY HIKES: Feb 7 (Sat) Nathan Richer (763-2127): If Mother Nature cooperates this will be a XC ski tour of the old King Ridge ski area in Sutton, off SRKG trail #13. Ever look for avalanche terrain on King Hill? Who would have thought! (M) Feb 14 (Sat) Henry Howell (938-5706): Cross over the Lane River in South Sutton for an exploration of lowlands forests, river edge, glacial erratics and who knows what. (E) Feb 21 (Sat) Lee Carvalho (735-5719): Frank Baker, outdoorsman in East Andover, will lead us on a snow shoe exploration to special spots in the East Andover woods. Up to 5 miles of back trails and wanders (M) Feb 28 (Sat) George Beaton (938-2637): In Bradford hills a snowshoe hike for views at Aiken Pasture. Depending on snow levels either (E) or (M). MARCH HIKES: Mar 7 (Sat) Gerry Gold (526-2857) Snowshoe to Lucia’s Lookout on Sunapee-Pillsbury Ridge from Andrew Brook Trail and Lake Solitude in Newbury. (D) For SRKGC information go to www.srkg.com.  SRK Greenway Trail Guides are available at local book stores.  The SRK Greenway Coalition is an all-volunteer non-profit organization with members throughout the Sunapee-Ragged-Kearsarge region and beyond. ************************************************************************ Known for service, trusted for results – Coldwell Banker Milestone Real Estate.

Looking for a Ski or Summer Retreat?

This great cottage may not be slopeside, but Mt. Sunapee Resort is just up the road and it will only take minutes to be on the trails making first tracks!  Two bedrooms, one bath.  Restaurants nearby.  A great buy at $99,000!

BrunelleJane Snow, Listing Agent, 603-526-4116

Known for service, trusted for results – Coldwell Banker Milestone Real Estate.

Looking for First Floor Living in New London, NH?

This newly painted and renovated patio condominium is bright and cheery.  Two bedrooms, 2 baths, interior garage and storage.  Monthly fee includes heat, cable, hot water, plowing, sewer, landscaping, trash removal, water and local transportation.  A one time buy-in fee is due at closing.  Offered at $179,000.

WhiteEmily Campbell, Listing Agent, 603-526-4116

Teamwork from the Team that works – Coldwell Banker Milestone Real Estate.

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