Definition
Tax deduction for mortgage points (discount points) paid to reduce loan interest rate.
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Points paid on primary residence mortgages are fully deductible year paid. Points on investment property are deducted over loan life. 1 point equals 1% of loan amount.
Pro Tip
Consider deductibility when deciding whether to pay points; may affect break-even calculation.
Example
Deducting $6,000 (2 points on $300,000 loan) paid to reduce interest rate on primary residence mortgage.