Quick Answer
Yes, mortgage points are generally tax deductible in the year you pay them if you use the loan to buy or improve your main home. For a $400,000 mortgage, paying 1 point ($4,000) could save you $960-$1,480 in taxes depending on your tax bracket.
Best Answer
Robert Kim, Tax Return Analyst
Best for homeowners who paid discount points when buying or refinancing their primary residence
Can I deduct mortgage points in the year I paid them?
Yes, you can generally deduct mortgage points (also called discount points) in the year you pay them, but only if you meet specific IRS requirements. According to IRS Publication 936, points paid on a loan to buy or improve your main home are fully deductible in the year paid if the loan meets certain criteria.
For a $400,000 mortgage where you paid 1 point ($4,000), this deduction could save you $960 in taxes if you're in the 24% bracket, or $1,480 if you're in the 37% bracket.
Requirements for deducting points in the year paid
To deduct points in the year you pay them, all of these must be true:
Example: $500,000 home purchase with points
Sarah bought a $500,000 home with a $400,000 mortgage. She paid 1.5 points ($6,000) to reduce her interest rate from 7.0% to 6.25%.
Tax benefit calculation:
Sarah can deduct the full $6,000 on Schedule A if she itemizes deductions and meets all IRS requirements.
What if I refinanced my mortgage?
Points paid on a refinance are treated differently. You generally must deduct them over the life of the loan, not all in the year paid.
Example: Mike refinanced his $300,000 mortgage and paid $3,000 in points for a 30-year loan. He can deduct $3,000 ÷ 30 years = $100 per year.
Exception: If you use part of the refinanced loan to improve your home, you can deduct points on that portion in the year paid.
Common scenarios and deduction rules
What you should do
1. Find your settlement statement (HUD-1 or Closing Disclosure) - points should be clearly labeled
2. Verify you meet all IRS requirements for immediate deduction
3. Use our return scanner to check if you missed claiming points from previous years
4. Keep detailed records of all home-buying expenses for future reference
If you paid points but didn't claim the deduction, you can file an amended return for up to three years.
Key takeaway: Mortgage points on your primary home purchase are typically fully deductible in the year paid, potentially saving $960-$1,480 in taxes per $4,000 in points depending on your tax bracket.
*Sources: [IRS Publication 936](https://www.irs.gov/pub/irs-pdf/p936.pdf), [IRS Topic No. 504](https://www.irs.gov/taxtopics/tc504)*
Key Takeaway: Mortgage points on your primary home purchase are fully deductible in the year paid if you meet IRS requirements, potentially saving $960-$1,480 per $4,000 in points.
Point deduction rules vary by loan type and purpose
| Loan Type | Deduction Method | Example: $4,000 Points | Annual Tax Savings (24% bracket) |
|---|---|---|---|
| Purchase primary home | Full deduction in year paid | $4,000 deduction | $960 |
| Refinance primary home | Spread over loan life | $133/year (30-year loan) | $32/year |
| Second home purchase | Spread over loan life | $133/year (30-year loan) | $32/year |
| Investment property | Spread over loan life | $133/year (30-year loan) | $32/year |
More Perspectives
Diana Flores, Tax Credits & Amendments Specialist
Best for first-time or recent home buyers who are unsure about their settlement statement
Where do I find points on my closing documents?
If you recently bought a home, points should be clearly labeled on your Closing Disclosure (the document you received at closing). Look for:
Don't confuse points with: Origination fees, processing fees, or underwriting fees. These are different charges and have different tax treatment.
How much could this save me?
For a typical first-time buyer:
This $462 tax savings effectively reduces your points cost from $2,100 to $1,638.
What if I can't find my closing documents?
Don't panic. You can:
1. Contact your lender - they're required to keep copies
2. Ask your real estate agent - they often keep transaction records
3. Check your title company - they handled the closing
4. Look at your loan documents - points are often mentioned in the promissory note
The itemization decision
To claim points, you must itemize deductions instead of taking the standard deduction ($30,000 for married filing jointly in 2026). For many new homeowners, mortgage interest plus points plus property taxes will exceed the standard deduction, making itemizing worthwhile.
Key takeaway: Check your Closing Disclosure for "Discount Points" - they're fully deductible if you bought your primary home, potentially saving hundreds in taxes.
Key Takeaway: Check your Closing Disclosure for "Discount Points" - they're fully deductible if you bought your primary home, potentially saving hundreds in taxes.
Robert Kim, Tax Return Analyst
Best for homeowners who refinanced their mortgage and paid points
How are refinancing points different?
When you refinance, points must generally be deducted over the life of the loan, not all at once. This is a common misconception that causes homeowners to either miss deductions entirely or claim too much in one year.
Example: Refinancing points deduction
John refinanced his $400,000 mortgage and paid $4,000 in points for a new 30-year loan:
The home improvement exception
If you use refinance proceeds to substantially improve your home, you can deduct points on that portion immediately.
Example: Lisa refinanced for $300,000. She used $250,000 to pay off her old mortgage and $50,000 for a kitchen remodel. She paid $3,000 in points.
What happens if I refinance again?
If you refinance before fully deducting your previous points, you can deduct the remaining balance in the year you pay off the old loan.
Example: Mark had $2,000 in points remaining from a 2024 refinance. When he refinanced again in 2026, he can deduct the full $2,000 remaining balance in 2026.
Key takeaway: Refinancing points must be spread over the loan life ($4,000 points = $133/year for 30 years), unless you use proceeds for home improvements.
Key Takeaway: Refinancing points must be spread over the loan life ($4,000 points = $133/year for 30 years), unless you use proceeds for home improvements.
Sources
- IRS Publication 936 — Home Mortgage Interest Deduction
- IRS Topic No. 504 — Home Mortgage Points
Related Questions
Reviewed by Robert Kim, Tax Return Analyst on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.