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Deducting Seller-Paid Points
Question: Who can deduct points paid by a seller?
Answer: Both buyer and seller. If a seller pays points, the points are deductible in the year paid as an expense of selling. If a buyer pays points, the point paid for by the purchaser are deductible by the purchaser in the year paid. If a seller pays points to assist the purchaser, the BUYER may deduct the value of the points paid in the year they were paid. If the buyer deducts points paid by the seller, the buyer must reduce the sales basis of the property (increase the amount of profit) when the home is sold. The above rules apply to owner-occupied prime residences only. If you bought a home after December 31, 1990 and had points paid by a seller, you may amend your return to claim an additional deduction. Write "seller-paid points" in the upper right-hand corner of the amended form. For specific information, please speak with a tax attorney, CPA, or enrolled agent.
© 1997 Peter G. Miller. All Rights Reserved.
Written by Peter G. Miller.
© 1997 Peter G. Miller. All Rights Reserved. Rules, Disclaimers & Notices.
Copyright © 2012 Realty Times. All Rights Reserved.
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