Deduct Seller Paid Points

I’m Kevin McCormally of Kiplinger’s with today’s tax tip. Here’s a twist. The IRS let some taxpayers deduct expenses that they even didn’t pay. This helps you if you bought a home during 2008 and convinced the seller to pay points charge on the mortgage loan. For years when the seller pays the points nobody got the deduction.

But now the IRS as far can usually pretend that they paid the points themselves and that translates to variable write off. Since the point is 1% of the mortgage amount this can save you a lot of money. In the 25% tax bracket $3000.00 of seller paid points, saves you $700.00.

You probably also get a break on your state tax return. Also check to see this if this turns mortgage interest or put up your taxes for part of the year that you actually own the house. If so, you get to deduct those costs on your return even if you didn’t reimburse the seller.

For more tax tips to help lower your tax bill, listen to Kiplinger tax center at www.kiplinger.com/taxcenter.


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