Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: Notesfiles $Revision: 1.7.0.10 $; site infoswx Path: utzoo!watmath!clyde!cbosgd!ihnp4!inuxc!pur-ee!uiucdcs!convex!infoswx!bert From: bert@infoswx.UUCP Newsgroups: net.taxes Subject: Re: buying/selling a house and taxes Message-ID: <95100001@infoswx> Date: Tue, 4-Feb-86 11:21:00 EST Article-I.D.: infoswx.95100001 Posted: Tue Feb 4 11:21:00 1986 Date-Received: Fri, 7-Feb-86 21:21:31 EST References: <190@pwa-b.UUCP> Lines: 31 Nf-ID: #R:pwa-b.UUCP:190:infoswx:95100001:000:1453 Nf-From: infoswx.UUCP!bert Feb 4 10:21:00 1986 >home mortgage line. Add any points paid to obtain the loan >(Typically 1 to 3 percent of the mortgage). This is also interest >paid. Of course, add on any interest paid later on your monthly This used to be true, but is no longer. Your friend and mine, the IRS, has added a note in the instructions explaining that these points are interest, but must be deducted over the life of the loan, which for a house is typically 30 years. Since practically nobody lives in a house for 30 years, I wonder if you can do something with the remaining undeducted amount when you dispose of the house. Any tax gurus have a comment? This information was alse included on a form that the mortgage company sends out stating interest paid for the year. Actually, my guess is that this is a response to the recent (around here) availability of buy-downs for home mortgages. You can now negotiate the interest rate substantially by agreeing to pay more points up front, whereas in the past, there were not many variations available. This would effectively allow you to purchase a good rate and write off the points all at once. The IRS is very good at spotting these kind of legitimate loopholes, and closing them up. Of course, I can't be sure if any LAW was passed saying that these prepaid points can no longer be deducted immediately, or if, more likely, the IRS has made yet another interpretation of existing law. Anyone know for sure? Bert Campbell