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Origination charges (points) not in 1098 desuctible?

Technical topics regarding tax preparation.
#1
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From my experience, most of the the origination charges (points) are not reported in 1098, do you know why? They are still deductible / amortizable?

A real refinance example is:

Code: Select all
A. Origination Charges $1,640.00
01 % of Loan Amount (Points)
02 Funding Fee       $350.00
03 Processing Fee    $595.00
04 Underwriting Fee  $695.00
 

#2
DavidG  
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Don't know why, but the 1,640 amount above are points and are deductible. If it is a refinance on a personal residence, then the points would be amortized over the life of the loan.
 

#3
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DavidG wrote:Don't know why, but the 1,640 amount above are points and are deductible. If it is a refinance on a personal residence, then the points would be amortized over the life of the loan.


DavidG, thanks for the response, I do agree that the points can be deducted even it is not on 1098. In this particular case, the origination fee consists of three service fees which are not the points. Points are "figured as a percentage of the principal amount of the mortgage".
 

#4
HowardS  
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In your example A01-04 are the points (itemized) and are a percentage of the loan amount (as stated by A01)
I suffer from depreciation.
 

#5
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In this example the detail of fees does not look like they are based on a percentage of the loan to me. I think the amount on A01 would be deductible as points (in this case zero), and the other amounts are origination charges of a flat fee nature.

But that's just what I see...
 

#6
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HowardS wrote:In your example A01-04 are the points (itemized) and are a percentage of the loan amount (as stated by A01)


HowardS, here is how I read. The A origination charges consists of A01 + A02 + A03 + A04. A01 has no amount, A02, A03, A04 are service charges. Only A01 is the points.
 

#7
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I agree with your assessment puravidatpt.

If there was an amount in A01 that would be amortizable as points. The other charges could be amortizable as loan costs if this is a rental, business, etc.
 

#8
HowardS  
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I read A01 as being a statement that the following items were points and a percentage of the loan amount. I guess it is all in the interpretation but the numbers appear too neat to be a percentage so I'm probably wrong (again).
I suffer from depreciation.
 

#9
lucyko  
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In the example provided, there is no points paid and therefore no deduction as interest .If there were points paid it is required to be entered on the 1098 INT in box 6 (see instructions for preparing 1098 INT ) .

About 5 -6 years ago the standard HUD statement was changed and there was, and is to this day, confusion about origination fees and deductibility . Just because there is a title "origination fees " does snot mean you can deduct these fees . None of the A02 thru A04 fees qualify for a deduction as points . These are simply loan fees .
 

#10
Nilodop  
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If there were points paid it is required to be entered on the 1098 INT in box 6 (see instructions for preparing 1098 INT ) .. Yes, but are you saying real points that somehow did not make it to the 1098 are therefore not deductible? I did not think so.
 

#11
lucyko  
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"Real points " for a refinance ((that meet all the requirements) are deductible over the life of the loan . Of course if the points relate to a new puchase they are fully deductible in the year of purchase.
 

#12
Frankly  
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As is typical with these escrow statements (aka "HUD-1", "Closing Disclosure", "Loan Estimate", "Closing Cost Details"), there are many various and sundry charges for nebulous services provided all listed with intentionally cryptic labels. One is left to figure out to the best of one's ability which are properly categorized as deductible, not deductible, or capitalized.
 


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