Client prepaid mortgage insurance and opted to amortize for 7 years, but for 2018 it is no longer deductible. Should I amend 2017 and deduct the balance?

[TaxGuyBill]

What year was the mortgage prepaid?

Was it "opted" to amortize over 7 years, or was it required?

[barby65]

In 2014 and the option was to amortize over 7 years, so he chose that.

[TaxGuyBill · Accepted solution]

No, there is no option to suddenly deduct the rest of the amortized amount.

[Terry53029]

According to "The Tax Book" mortgages paid off early, you deduct the balance of points in year paid off.

[TaxGuyBill]

This is mortgage insurance, not points, which can not be deducted when it is paid off.  And there is no indication that the balance was paid off.

[Terry53029]

Add to above This is from pub 936  "Mortgage ending early.
If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. However, if you refinance the mortgage with the same lender, you can't deduct any remaining balance of spread points. Instead, deduct the remaining balance over the term of the new loan.
A mortgage may end early due to a prepayment, refinancing, foreclosure, or similar event"

[Terry53029]

Sorry TaxGuyBill, I just read amortized, and thought points, Two weeks to go 🙂