For homeowners wanting to refinance, the IRS usually requires that mortgage points, or prepaid interest, be amortized over the lifetime of the loan.
There's one exception, says Eric J. Wexler, a Rockville, Md., tax attorney and CPA.
If a portion of the refinanced mortgage proceeds is put toward home improvements, the points related to the home improvement amount may be deducted in the tax year of the refinance.
That is assuming the amount falls below the $100,000 deduction limit and that other IRS requirements have been met, Wexler says.
Rick Good spent ten years in the newspaper business, including with The News & Observer (Raleigh, NC) and The Greenville News (Greenville, SC). He co-wrote, with Melinda Coleman, Rutledge to Riley: Governors of South Carolina, 1776–Present (Published by The Greenville News), and is the author of Mind Games Trivia #1 (Amazon). He has recently spent 15 years creating original trivia content through Sounds Good Mobile Entertainment and continues that with his new company, SGME Software. He edits The Smart Reader’s money, real estate, and business coverage.
