Homeowner Tax Tip #4: Refinancing

If you refinanced last year, you may be able to write-off any points you paid to buy down the mortgage rate. To do so, you deduct the points ratably over the life of the new loan, (unless part of the new loan is used for home improvements in which case the IRS allows a deduction for a portion of the points allocable to the home improvements). If the loan is paid off prior to maturity (e.g., the residence is sold and the loan paid off, or the loan is refinanced with a different lender), the remaining unamortized balance of the points can be deducted in that tax year. But if the mortgage is refinanced with the same lender, the unamortized “old” points and any new points must be deducted over the term of the new loan.

The following white paper outlines a series of tax laws in regards to homeownership: http://www.dh-cpa.com/client_media/files/pdf/2015RefNL_TaxTipsHomeowner.pdf

Need help analyzing what tax breaks you may be eligible for? Davis and Hodgdon Associates CPAs has been assiting nonprofits, individuals and businesses with tax and accounting services in the Burlington Vermont Metro area for more than 20 years. If you have any questions or concerns please feel free to call 802.878.1963 or email [email protected].

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