Mortgage interest worksheet

[FrankK]

The home mortgage interest worksheet includes a place to enter points. But in the case where the taxpayer has a new mortgage, points are paid, and the average loan balance is more than $750K, it appears that the worksheet does nothing with the points (doesn't even prorate).  This does not make sense.

[rbynaker · Accepted solution]

Hey Frank!  Welcome.  I think I still have the dummy return I was playing with when we discussed this.  Yeah, here's the screenshot.  Entries on this line for Points paid don't carry anywhere and they definitely should.

Rick

[rbynaker]

Oh, I probably should find an adult.  I'm not sure anyone is working ProSeries forums tonight but I can give @Ashley at Intuit (aka Henry Jr) a shout out and she can tag team someone on this.

[Marc-TaxMan]

@FrankK are you talking about a new purchase with deductible points, or a re-fi with amortizable points?

[rbynaker]

In the example that Frank and I worked on in was a new purchase.

[FrankK]

New purchase

[Marc-TaxMan]

Are you using the QuickZoom at 8A to the full-blown worksheet?  I just tried it and it worked fine.  I entered a $1M mortgage, it took 75% of points and int onto line 8a.

[FrankK]

Yes on the quick zoom.  Interesting: I tried a single new mortgage of $1M plus $10K points paid, loan originates in 02/18, and it prorates both interest and points as expected.  In my case, there was one mortgage from 2016 from Jan-May. Client sold home, bought new one in June. Took $850K mortgage in June.

[FrankK]

I just went back and opened the original return where I found the issue, and the worksheet & Sched A are now prorating points as I expected.  I didn't change anything.  Must have been on a trip to the Twilight Zone...

[JOFI]

Question:  in this case where the points for a new home purchase must be pro-rated due to balance exceeding $750K limit, what happens to the points that cannot be deducted?  Are they lost forever or can they be rolled over to future years?

Thanks in advance.