Can You Write Off Points on Your Taxes: Rules, Limits, and Claims

Yes, you can write off mortgage points on your taxes if you itemize deductions on Schedule A. Points paid to buy or build your main home are usually fully deductible in the year you close, while points on a refinance, second home, or loan that doesn’t meet the IRS tests must be spread evenly over the life of the loan. One point equals 1% of the loan amount, so on a $400,000 mortgage, one point costs $4,000.

When You Can Deduct Points the Year You Paid Them

Federal tax law generally treats prepaid interest as a cost you spread over the period it covers. Points are the exception, but only when every one of these conditions is true:¹

The loan is secured by your main home.
Paying points is an established business practice in your area, and the amount doesn’t exceed what lenders there typically charge.²
The points are calculated as a percentage of the loan principal, not a flat fee for services like appraisals or title work.
You use cash-basis accounting and bring enough of your own money to closing to cover the points. Financing them into the loan balance disqualifies the same-year deduction.
The points appear as a distinct line item on your Closing Disclosure or HUD-1.
The loan proceeds are used to buy or build the residence that secures the mortgage.

That last requirement trips people up. Points paid only to borrow money, without lowering the rate, aren’t deductible in the year paid. The Schedule A instructions make this explicit: points paid for a lender’s services rather than to reduce the interest rate aren’t deductible at all.³

Points on a loan used to substantially improve your main home qualify under the same tests, as do construction loan points if the home becomes your main residence.⁴ Points on a mortgage for a rental property don’t qualify; they’re always amortized and reported on Schedule E instead.

When Points Must Be Spread Over the Loan Term

If you don’t meet every condition above, you can still deduct the points. You just have to spread them evenly over the life of the loan. This is the rule for refinances, second homes, and any situation that fails the same-year tests.⁴

The math is simple. Divide the total points by the number of monthly payments. On a 30-year mortgage with $6,000 in points, that’s $6,000 divided by 360 payments, or $16.67 per month, roughly $200 a year.¹ You can only deduct for months you actually make payments, so a closing in October gives you three months’ worth the first year.

If You Sell, Pay Off, or Refinance With a Different Lender

If you sell the home, pay off the mortgage early, or refinance with a different lender, you can deduct the entire remaining balance of unamortized points in that final year. Paid $3,000 in points on a 15-year loan, deducted $200 a year for ten years, then sold? The remaining $1,000 comes off in the year of the sale.¹

If You Refinance With the Same Lender

This costs people money they didn’t need to lose. Refinance with the same lender and you cannot deduct the leftover points from the old loan at once. You add the unamortized balance to any new points and spread the combined total over the new loan’s term.¹ If you have substantial unamortized points, getting quotes from a competing lender may preserve the one-time deduction.

The Mortgage Debt Limit

Your points deduction is subject to the same debt ceiling as all home mortgage interest. For mortgages taken out after December 15, 2017, you can only deduct interest (including points) on up to $750,000 of acquisition debt, or $375,000 if married filing separately. Mortgages originated before that date fall under the older $1,000,000 limit.¹

The $750,000 cap was originally scheduled to expire after 2025. The One, Big, Beautiful Bill Act, signed into law in 2025, made the lower cap permanent.⁵

If your mortgage exceeds the limit, you prorate the deduction. Publication 936 includes a worksheet (Table 1) that divides your qualified loan limit by your total mortgage balance to give a decimal ratio. Multiply your otherwise-deductible points by that ratio to get what you can claim.¹ On a $1,000,000 mortgage, that generally works out to about 75% of the points.

Seller-Paid Points

If the seller pays points on your behalf, you can still deduct them as if you paid them yourself. The IRS treats seller-paid points as funds you provided. The catch: you must reduce your cost basis in the home by the same amount.⁴ A lower basis increases your taxable gain if you later sell for a profit. For most homeowners, the principal-residence exclusion ($250,000 single, $500,000 married filing jointly) absorbs any gain and the basis reduction is a non-issue. If you own an expensive home or sell quickly without much appreciation, the tradeoff matters.

How to Claim the Deduction

Start with your Closing Disclosure, which lists points as a line item under origination charges.⁶ For loans that closed before October 2015, the equivalent document is the HUD-1 settlement statement. Cross-check the amount against Box 6 of Form 1098, which your lender sends each January to report points paid on the purchase of a principal residence.⁷

Where the amount lands on Schedule A depends on how it was reported. Points that appear on your Form 1098 go on Line 8a. This is the usual scenario for a home purchase.³ Points not on your Form 1098, which is typical for refinances, go on Line 8c. Enter the deductible amount there and reference Publication 936 for the amortization calculation.⁸

Whether Itemizing Is Worth It

None of this matters if you take the standard deduction. For the 2026 tax year, the standard deduction is $16,100 for single filers, $32,200 for married couples filing jointly, and $24,150 for heads of household.⁵ Points only help if your total itemized deductions (mortgage interest, points, state and local taxes, charitable contributions, and other eligible expenses) exceed those thresholds.

Points alone rarely push someone over the line. A buyer who pays two points on a $350,000 loan adds $7,000 in deductible expense, but that has to stack with everything else to beat $16,100 or $32,200. The year you buy is often the best year to itemize because you can combine a full year of mortgage interest with the points and any property taxes paid at closing. In later years, once the points are gone and interest payments shrink through amortization, the standard deduction frequently wins. Run the numbers both ways before you file.

1
Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction
2
Office of the Law Revision Counsel. 26 USC 461 – General Rule for Taxable Year of Deduction
3
Internal Revenue Service. 2025 Instructions for Schedule A (Form 1040)
4
Internal Revenue Service. Topic No. 504, Home Mortgage Points
5
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill
6
Consumer Financial Protection Bureau. Closing Disclosure Explainer
7
Internal Revenue Service. Instructions for Form 1098 (Rev. December 2026)
8
Internal Revenue Service. Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses)