| Description: |
I'm in a first time home buyer program called Neighborhood Assistance Corp of America (NACA). I paid absolutely no closing costs and no PMI is required if the downpayment is less than 20%. This program allows the buyer to buy down the interest rate on the loan to as low as 0.5% (no one ever believes me when I tell them that, they think I'm mixed up and it's 5%).
Anyway, I bought the interest rate down to 0.625%. My question has to do with this buy down or points paid. I paid $26,880 in points (21 points times 1% of the loan of 128000). I want to know if I can fully deduct these points for 2006?
I just bought the home. If I spread the points out over the course of 30 years it's just not enough to be a good deduction - it works out better to take the standard deduction. I looked in pub 17 and I checked IRS.gov. and I know the general rule is that I cannot deduct the full amount of the points in the year paid. However, there is an exception clause.
I know that I meet 7 of the 9 requirements of the clause. The other two requirements I'm not sure about [1."The points paid were not more than the points generally charged in the area where the loan was made" - I'm afraid the answer might be no to this. 2. "The funds you provided at or before closing" {about 12,400 for down payment, escrowed funds and earnest money) "plus any points the seller paid, were at least as much as the points charged." -maybe no now that I really look at it.]
If the answer is no to the deduction of the full amount of points in the year paid, can I at least deduct, for this first year, the amount of points that would generally be charged in this area (St. Louis, MO)? And, if so what is the amount of points generally charged here? |
