Points Paid by the Buyer
One point is 1% of your mortgage, and can usually lower your interest by .25%. A point is interest that you have pre-paid in order to “buy down” the fixed interest imposed on your mortgage.
If the buyer paid points, they are generally not deductible in the year they are paid. Instead they must be deducted over the life of the loan.
Points are amortized over the life of the loan unless you refinance, in which case the unamortized points are fully deducted in the year the new loan is taken out.
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