Matthew purchases a new principal residence in the current year and pays points of $2,000 to obtain a mortgage loan. What is the proper tax treatment for the points paid?
A)The points are a nondeductible personal expense.
B)The points must be amortized over the life of the loan.
C)The points are fully deductible in the current year.
D)The points must be capitalized into the cost of the residence.
E)The points must be amortized over 5 years.

Question

Quizplus · Accepted Answer

Points paid on a mortgage for the purchase of a principal residence are generally fully deductible in the year they are paid, according to the IRS tax rules.

Matthew Purchases a New Principal Residence in the Current Year