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HOMEOWNERS who paid “points” to refinance their mortgage last year won’t be able to fully deduct the one-time lender charges on their 1997 income tax return.
Although points paid in connection with the purchase of a principal residence usually can be written off in a lump sum, points paid in a refinancing generally must be deducted gradually over the life of the loan.
But there is an exception that can help homeowners who used part of the refinancing proceeds for home improvements. In such cases, points on that portion of the refinanced loan can be immediately deducted in full provided you paid the fees using your own private funds rather than the proceeds of the loan.
