Settlement sheet #801 has Origination charge (including origination points $0) of $866.95 on loan of $149900. No points on 1098. We often see origination charges here that we deduct as points paid on original home purchase,however, this one is not an obvious % and has the (including origination points $0) on line. Makes us think it's not points but ????? Advise? Thanks
Points (those that meet the tax definition) should be on line 802. E.g., if you borrow money with no points, the lender is going to have an origination charge. It's their fee for processing the loan. They should put it on Line 801. If the loan has points associated with buying down the interest rate, the amount should be on Line 802. A very confusing issue as all lenders use different terminology.
The full definition of deductible points can be found in IRS Pub 530. There's 8 or 9 requirements. A key requirement is that the amount is a percentage of the loan.
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