I am refinancing my home for the current amount of my mortgage and am paying points to buy the rate down. If I pay for the points this year can I claim them as a tax deduction this year since I am not taking out any equity? It is normal practice in my area to pay points.

Zip Code: 94550

While you get to deduct points paid on the purchase of a home, points paid on a refinancing need to be amortized over the life of the mortgage. So if you pay points of $1,500 to refinance to a 15 year mortgage, you get to deduct $100 per year for your points.

Even though the annual tax deduction is minimal, you definitely want to keep track of these points, since if you refinance out of that mortgage down the road, you get to write off the unamortized points.

Please note that if you borrow additional funds and use that money to improve your property, you can write off that portion of your points this year.

Zip Code: 01801