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I'm buying a house, my seller is paying for closing costs up to 3% of home value. Because my closing costs aren't nearly as high as 3% of the home value I'm adding a couple thousand worth of interest points which the sellers money will be used to pay for. Can I deduct these on my taxes? I know if I pay for them I can but I'm not sure how this situation handles it. To further complicate it my total closing costs are going to be a little over what the seller is paying, so the seller will pay for most of it and I will pay for some of it and the closing costs are only partially for interest points.
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You will recieve a IRS Form 1098 from your mortgage company showing the points you paid. This is shown in Box 2. Contact the lender to confirm the amount they will report on your 1098.My other blog is Your Organized Friend. -
Found the answer to my question here:
"If the seller pays the buyer’s points, the Internal Revenue Service allows the buyer to deduct this as an expense on their federal tax returns. However, the seller cannot deduct them, too. Paying the buyer’s closing costs, including points, merely reduces the net gain on the home for purposes in calculating capital gains taxes (which are usually deferred)."Comment
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