Deducting Your Dwelling

On the flip side, if you paid points on a refinancing, they must be amortized over the life of the loan, says Luscombe. So if you paid $3,000 in points on a 30-year-loan, deduct $100 each year.

But say you refinanced a second time in 2005, which isn't implausible. The points you were amortizing on the first refinance are now fully deductible. So deduct those and get rid of them, because the loan is gone. The points you paid on the newly refinanced loan must again be amortized.

With any mortgage, you should have gotten a Form 1098 - Mortgage Interest Statement by the end of January showing the amount of deductible interest you paid on that loan in 2005. Form 1098 also reports any points paid in that year. But the form doesn't keep track of amortized points. So make sure you explain to the IRS that you're deducting points from a prior year, and include a note on the back of your return showing how you calculated the amortized point deduction.

While you may not have homes all over the country like Brad and Angelina, you still have a fabulous place to hang your hat at the end of the day. And whether that house is sucking the financial life out of you or not, it's still a good feeling to know you have a roof over your head.

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