Can I deduct the full cost of mortgage points if my home loan exceeds $750,000?

9 Thanks for explaining! I have a follow-up question - are mortgage points always deductible in the year you pay them, or do you have to spread the deduction over the life of the loan? Also, does it matter if the points were paid by me or by the seller?

4 For a primary residence, points are typically fully deductible in the year you pay them, as long as several requirements are met (paying for points must be an established business practice in your area, the points must be calculated as a percentage of your loan, etc). If the seller paid your points, you can still deduct them, but you'll need to reduce the basis in your home by that amount. The seller would treat it as a selling expense. Remember that if points are for refinancing rather than a home purchase, those generally must be amortized over the life of the loan.

6 How does the system work with various mortgage lenders? I have a jumbo loan through a local credit union and their documents are kind of... unique. Would taxr.ai still be able to process them correctly?

12 I'm curious about this too. Does it just tell you what's deductible or does it actually help with filling out the tax forms? My situation is complicated because I have a home office deduction too.

15 The system works with all types of mortgage documents, including non-standard ones from credit unions and smaller lenders. It uses advanced document recognition to extract the key information regardless of format. I had a Wells Fargo mortgage with some unusual rider attachments, and it processed everything correctly. It both tells you what's deductible AND helps with filling out the forms. It actually creates a detailed worksheet showing exactly which lines on Schedule A need to be completed and with what amounts. For home office situations, it will even show you how to allocate the deductible portion of your mortgage interest and points between Schedule A and your business expenses on Schedule C.

7 Wait, how does this actually work? They somehow get you to the front of the IRS phone queue? That sounds too good to be true. The IRS wait times are infamous.

22 I'm super skeptical about this. Why would the IRS let some third-party service jump their phone queue? And even if you do get through, are you sure the advice is reliable? Tax laws about mortgage deductions are complicated.

18 It actually works by using an automated system that navigates the IRS phone tree and waits on hold for you. When they reach a representative, you get a call connecting you directly to that agent. They don't jump the queue - they just do the waiting for you. The IRS agents you speak to are the same ones everyone else talks to - actual IRS employees who can provide official guidance. I specifically asked about mortgage point deductions on loans exceeding $750,000, and the agent referred me to the exact sections in Publication 936 that covered my situation. They even emailed me documentation that I can keep for my records if my return is ever questioned.

19 What kind of documentation did they ask for during your audit? I'm worried because I paid points on a $1.2M mortgage this year and I'm not sure what to save beyond my closing disclosure.

3 They wanted to see my closing disclosure, the loan estimate, my final settlement statement, proof of how I paid the points (bank statements), and evidence of how I calculated the deductible portion. I created a simple spreadsheet showing the $750k limit divided by my total mortgage amount to get the percentage, then applied that to the points. I also kept all correspondence with my lender, especially any that specified the amount paid in points and the interest rate reduction I received. The audit went smoothly because I had everything organized and could clearly show my math. Don't just rely on tax software to get this right - double-check the calculations yourself.

10 For mixed-use properties like your duplex, you need to allocate based on square footage or number of identical units. So if it's a 50/50 split, half of your points would be subject to the $750k limit for your personal residence (Schedule A), and the other half would be a rental expense on Schedule E (not subject to the same limit). The rental portion can typically be deducted in full as a business expense, but personal residence portion needs the percentage calculation if your loan is over $750k. So it's actually a bit better for the rental portion!

Welcome to the community! Your calculation looks correct - 88% of your points should be deductible given the $750k/$850k ratio. For timing, you definitely claim the points on your 2024 return since that's when you paid them at closing. The IRS goes by when the expense was actually paid, not when you decide to file. December closing still counts for 2024. Regarding VA loans, the good news is that points on VA loans follow the same deduction rules as conventional mortgages. The government backing doesn't change the tax treatment - you still get to deduct the proportional amount based on the $750k limit. Just make sure your closing disclosure clearly shows the points as a separate line item, which it should. Keep all your VA loan documents together since they sometimes have slightly different terminology than conventional loans, but the IRS treats them the same for deduction purposes.