Discussion:Refinance points paid off
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> Refinance points paid off
| 6 February 2007 | |
| I am hoping someone can help clarify this question. I know that refinance points can be written off when they are paid off through another refinance as long as it is with a different lender. However, what if the original lender who charged the points later resold the loan to another company and then my client refinanced with the original lender again???
For example, in 2005 my client refinanced with Eagle Mortgage, on which there were points. Eagle Mortgage quickly sold the loan to Wells Fargo. In 2006 my client went back to Eagle Mortgage to do another refinance, paid more points and had Eagle Mortgage payoff Wells Fargo. My initial interpretation of the rule on the pay off of refinance points is that you cannot deduct them if you use the same lender, which would mean she could not deduct the points since she used Eagle Mortgage on both refinances. However, since Eagle Mortgage paid off Wells Fargo and not an Eagle Mortgage loan (since they sold it in 2005) do the old 2005 points qualify to be deducted in full in 2006? Thank you! | |
| 6 February 2007 | |
| Just to clarify my question ... I meant deducted in full. I know she can still amortize the points on the 2005 refinance.
Thanks! | |
| 6 February 2007 | |
| When Eagle was paid off the points were paid off. It is deductible. It is also deductible if refied by the same company because the original points are paid off at that time and "new" points come into play.
If the finance company sells the loan it includes the points. They are not deductible by the client until the loan is paid off. A refi creates a payoff. taxea | |
| February 6, 2007 | |
| Agree with Taxea. I always deduct the remaining points when the loan is refinanced, even with the same lender, but not when the loan is sold to another lender. | |
Death&Taxes (talk|edits) said: | 6 February 2007 |
| Exactly, Taxea and Deb. | |
