Is my broker fee that was applied as mortgage points tax deductible?

External question — Personal Finance Stack Exchange Author: Sal Original post: https://money.stackexchange.com/questions/165109 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I purchased my home in 2024 with a mortgage and am having a hard time telling if I can deduct mortgage points on my federal tax return as outlined in: https://www.irs.gov/taxtopics/tc504 When obtaining my loan I opted not to purchase any points to lower my interest rate however my lender applied their broker fee as points to lower my rate for me which they made a big deal of by saying how generous they were being. On my closing document for the mortgage under Loan costs I have the following table: A. Origination Charges Borrower Paid 01. % of Loan Amount (Points) - 02. Application Fee $1,000.00 03. Broker Fee to my-mortgage-company $10,000.00 As well as tables B. Services Borrower Did Not Shop For and C. Services Borrower Did Shop For containing line items for things like: Appraisel Fee, Title Fees, etc. However in the 1098 form provided to me by my mortgage company Box 6 contains the following: 6. Points paid on purchase of principal residence: $10,000.00 The verbiage in the IRS documentation makes me believe that this amount is not tax deductible: The points were computed as a percentage of the principal amount of the mortgage, and The amount shows clearly as points on your settlement statement. As well as this item under Nondeductible costs to obtain a mortgage : Additional points the lender charges in lieu of other costs such as appraisal fees, inspection fees, title fees, attorney fees, and property taxes. I'm leaning towards playing it safe and not adding this amount to my tax return but wanted to ask here to see if anyone had any other insights on this topic.

External answer — Personal Finance Stack Exchange Author: littleadv Original post: https://money.stackexchange.com/a/165111 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. When obtaining my loan I opted not to purchase any points to lower my interest rate however my lender applied their broker fee as points to lower my rate for me which they made a big deal of by saying how generous they were being. This is confusing. Your lender added points despite your explicitly requesting not to? How in the world did that happen? What you're describing is that the mortgage broker used their own commission to buy your rate down, which means they earned less from the transaction. Generous? Maybe. Stupid? Probably. Your problem? Not at all, honestly. However in the 1098 form provided to me by my mortgage company Box 6 contains the following: 6. Points paid on purchase of principal residence: $10,000.00 If the closing statement (HUD-1) doesn't match the actual note - the lender may have a problem. If the 1098 doesn't match the actual note - the lender may have a problem. In any case, broker fee is not a deductible expense for the purposes of the mortgage deduction, but it does add to your house cost basis as part of the acquisition costs. Points can be deductible (See the IRS tax topic 504 ), but in your case it doesn't seem that these are in fact points as defined (specifically, the amount is not a percentage of the loan value).