On July 1 of the current year, Marcia purchases a new home and borrows $320,000. Marcia is required to pay two points on the loan. The loan is secured by the residence and the charging of points is an established business practice in the area. The term of the loan is 20 years, beginning on July 1 of the current year. How much, if any, of the points may Marcia deduct in the current year?

Question

Quizplus · Accepted Answer

Marcia can deduct the full amount of points paid on the loan in the year of purchase if the loan is for her primary residence and the points are a common practice in the area. Two points on a $320,000 loan is $6,400, which is fully deductible in the current year.

On July 1 of the Current Year, Marcia Purchases a New