Tax Deductions

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Feb 24, 2011 - 9:00PM

Re: Origination Fee

Thanks for your reply, Andrew. So just to clarify, is the term "origination fee" used interchangably with the term "points"? If so, it sounds like a flat origination fee (not a percentage of the loan amount) could be deducted over the life of the loan. Is this your usual practice?

Thanks again for your time and helpful advice.
Mike

Andrew Schwartz CPA

Feb 27, 2011 - 5:14PM

Re: Origination Fee

The terminology and the interpretation is probably more complicated than it needs to be. But that's with every aspect of the tax code these days.

I took a look at the information I cut and pasted from the IRS site, and it looks like the 8th bullet states:

8. [To be allowable]the points were computed as a percentage of the principal amount of the mortgage, and the amount is clearly shown as points on your settlement statement.

Based on this bullet point, if the amount for the origination fees is a flat amount and not a percentage of the amount borrowed, then I'm not sure it's deductible. What did your tax person or Turbo Tax tell you about deducting these origination fees?

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