Mortgage Points Deduction Calculator

Yes — mortgage points are itemized deductions on Schedule A. Points paid on a loan to buy or build your main home are fully deductible in the year paid if you meet all nine tests in IRS Pub 936. Points on a loan to substantially improve your main home (a HELOC included) are also deductible in the year paid if Pub 936 tests 1 through 6 are met. Points on a REFINANCE are generally deducted over the new loan's term, except the part tied to proceeds used to substantially improve your main home; points on a second home or a HELOC not used to improve your main home are also spread over the loan's term.

Points paid to refinance are generally deducted ratably over the life of the new loan. For a 30-year refi with $6,000 in points, you deduct $200/year ($6,000 ÷ 30) for each full year the loan is outstanding; in the first year you deduct only the months you made payments. Spreading points ratably requires a loan period of 30 years or less, and either an initial principal of $250,000 or less or points of no more than 4 (loan period 15 years or less) or 6 (longer) (Pub 936 "Deduction Allowed Ratably"); a longer loan, or a loan over $250,000 with more points than the limit, doesn't qualify for the ratable deduction. If the mortgage ends early (prepayment, sale, refinance), you can deduct the remaining balance that year, but if you refinance with the same lender you can't: you deduct the remaining balance over the term of the new loan.

Split treatment under IRS Pub 936. The portion of points attributable to substantial home improvements gets the year-1 full deduction (like a purchase). The remainder is spread over the loan term by month, and the first year gets only the months you made payments. Example: $8,000 points on a $400k refi where $200k went to improvements = $4,000 deductible year 1 + $133/year for the remaining $4,000 over 30 years (a full 12 payments in year 1). Pub 936's own example: $25,000 of a $100,000 15-year refi improved the home, $2,000 of points, six payments made = $500 + $50 = $550 in year 1.

IRS Pub 936 lists nine tests, all of which must be met to fully deduct points in the year paid on a loan to buy or build your main home: (1) the loan is secured by your main home, (2) paying points is an established business practice in the area, (3) the points were not more than generally charged there, (4) you use the cash method of accounting (most individuals), (5) the points were not paid in place of amounts ordinarily stated separately on the settlement statement (appraisal, inspection, title, attorney fees, property taxes), (6) the funds you provided at or before closing, plus any points the seller paid, were at least as much as the points charged (not borrowed from your lender or broker), (7) you use the loan to buy or build your main home, (8) the points were figured as a percentage of the principal, and (9) the amount is clearly shown as points on the settlement statement. Tests 1 through 6 are the ones that apply to a loan to substantially improve your main home.

If the HELOC is secured by your main home and you used it to substantially improve that home, IRS Pub 936 lets you fully deduct the points in the year paid when tests 1 through 6 are met (choose the home-improvement loan option above). Otherwise the points are amortized over the loan term. The interest itself (and by extension the related points) is only deductible at all if the HELOC proceeds were used to buy, build, or substantially improve the home securing the loan, per the TCJA home-equity interest rules — permanently extended by OBBBA §70108 (P.L. 119-21), which removed the original December 31, 2025 sunset.

The decision depends on (a) your break-even period — months until interest savings exceed point cost — and (b) how long you'll keep the loan. Plan to be in the home longer than the break-even period for points to pay off, and longer still after factoring in the tax-amortization benefit. For a refinance, the tax amortization plus interest savings means break-even is typically 3-7 years; if you might sell or refinance within that window, paying points usually loses.

Schedule A line 8a (home mortgage interest from Form 1098) for points reported on Form 1098, or line 8c (points not reported on Form 1098) if your closing statement shows them separately. The lender's Form 1098 will report points paid in box 6 if they qualify for year-1 treatment.