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Have any of you received your 1098 yet? If so, did it show the points on the 1098?
I'm just curious how it is reported. I know the points are interest, and if not paid upfront then I amortize them over the life of the loan and use that amount, in addition to my mortgage interest, as a tax deduction each year. Has anyone else done this? This was my first refi, so I'm just being extra careful on my taxes!
Points paid on a purchase are fully deductible the year paid/ points paid on a refi are deducted over the life of the loan. I am not a tax preparer so consult yours for more specific information.
Points paid on a purchase are fully deductible the year paid/ points paid on a refi are deducted over the life of the loan. I am not a tax preparer so consult yours for more specific information.
I know that. I'm asking specifically about points on a refi - that were NOT paid upfront and were rolled into the total amount of the loan. I don't have a tax preparer - just thought I would ask here to see what others have experienced.
The points were paid to the lender at closing in full as all points on a loan are. Where you got the money to do so is irrelevant to when they were paid.
The points were paid to the lender at closing in full as all points on a loan are. Where you got the money to do so is irrelevant to when they were paid.
According to the IRS, when they were paid IS relevant to how you deduct them. If you paid them up front, you can deduct them in that year. What I am asking, is if the 1098's typically show the points if they were rolled into the loan.
Lets start over and define points- what is your definition?
I don't know why you would ask that - there is no confusion on that point. The IRS's definition is here: The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points also may be called loan origination fees, maximum loan charges, loan discount, or discount points.
So....origination fees, discount points, whatever - it's all defined as points. I simply am asking if others have had the mortgage company report those interest costs, even if they were rolled into the loan and not paid upfront, on the 1098. If not, I am assuming one would report the points based on your closing documents, and describe the difference in an attached statement.
With the current HUD-1 settlement statement it is not all the same. There are now 4 parts to origination:
1- true discount that goes directly to the bank as prepaid interest. May be tax deductible this year as this is true discount.
2- what the bank pays a broker and formally known as yield spread premium. Not tax deductible as to avoid paying this fee yourself you accepted a slightly higher interest rate, you do get to write off the interest as you pay it over the life of the loan.
3- broker fee to recieve par rate for a loan program. May be tax deductible this year.
4- commitment or underwriting fee which goes directly to the lender. May be tax deductible this year.
I get that to the general public these are one in the same, but you were asking specifically in regard to taxes and then there is a more detailed definition. If you paid it regardless of how you got the money to do so(rolled it into the loan) it may very well be tax deductible this year. If the bank paid it then it was in exchange for a higher interest rate and you write it off as you pay it. For a true dscount point there is no way to "roll it into the loan". You pay it at closing its just that you get the funds to pay the fee by borrowing them.
Just wait the 2 weeks or so until the documentation comes directly from your lender as that is all that really matters.
With the current HUD-1 settlement statement it is not all the same. There are now 4 parts to origination:
1- true discount that goes directly to the bank as prepaid interest. May be tax deductible this year as this is true discount. I know ...I wasn't asking about points paid upfront.
2- what the bank pays a broker and formally known as yield spread premium. Not tax deductible as to avoid paying this fee yourself you accepted a slightly higher interest rate, you do get to write off the interest as you pay it over the life of the loan.
3- broker fee to recieve par rate for a loan program. May be tax deductible this year.
4- commitment or underwriting fee which goes directly to the lender. May be tax deductible this year.
I get that to the general public these are one in the same, but you were asking specifically in regard to taxes and then there is a more detailed definition. If you paid it regardless of how you got the money to do so(rolled it into the loan) it may very well be tax deductible this year. If the bank paid it then it was in exchange for a higher interest rate and you write it off as you pay it. For a true dscount point there is no way to "roll it into the loan". You pay it at closing its just that you get the funds to pay the fee by borrowing them.
I wrote no checks at closing. All costs were rolled into the loan. My points were described as a "discount point" and an "origination fee". Both are nothing more than interest, and both, were rolled into the total loan amount.
Quote:
Originally Posted by dad2jules
Just wait the 2 weeks or so until the documentation comes directly from your lender as that is all that really matters.
Well, obviously I will see on my 1098, when I get it. I was asking what others have experienced, on THEIR 1098.
I jsut realized there was a mortgage forum on here...can a moderator move this thread to that board??
Just wait the 2 weeks or so until the documentation comes directly from your lender as that is all that really matters.
My 1098 was just posted online, and the points are not on the 1098. THAT is why I was asking...I had a feeling that they would not be included since they were not paid upfront. So I'll have to attach a statement to the return.
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