I think I know the answer to this one, but I'm hoping someone smarter than me can correct me.
My client had a home mortgage loan of $400,000. His home is worth over $2 million. Therefore, he refinanced for $2,000,000 in towards the end of 2021 and paid almost $20,000 in pre-paid points. With the $1.4 million cash-out, he used a portion to purchase stocks and a rental property. However, these new investments wasn't purchased until early 2022.
I'm afraid to tell him most of the $20,000 prepaid points is not tax deductible as a 2nd home, rental, or investment interest deduction on his 2021 tax return because the second home and stocks were not purchased during 2022. Please tell me I'm wrong.