I refinanced the mortgage on my primary residence in July 2007, paying points, and took about $10k out which I used to renovate one of the rooms in the residence. Since I used the cash to improve the home, can I deduct 100% of the points I paid in 2007 or must I amortize them?
No. You may only deduct those points that relate to the $10,000. The remaining points are amortized over the term of the new loan. E.g., your new loan is $100,000. Points were 1.5% or $1500. You could deduct $150 in 2007.
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