Are Mortgage Points Deductible? Rules for Your Home, Rental, and Vacation Property

Mortgage points—sometimes called discount points—are fees paid to a lender at closing to obtain a lower interest rate. Each point equals 1% of the loan principal.

Points can represent either:

• Prepaid interest, which may be deductible, or

• Origination or service fees, which are not deductible.

The tax treatment depends on how the property is used and the purpose of the loan.