Points

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Points

Points are certain charges sometimes paid by a borrower. They are also referred to as loan origination fees, maximum loan charges, loan discount, or discount points. If the payment of any of these charges is only for the use of money, it is interest. Because points are, in effect, interest paid in advance, generally you may not deduct the full amount for points in the year paid. Points that represent prepaid interest generally must be deducted over the life of the loan. However, you may be able to deduct the entire amount you pay as points in the year of payment if the loan is used to buy or improve your principal residence, is secured by that home, and certain other tests apply.

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