On April 1,year 1,Mary borrowed $200,000 to refinance the original mortgage on her principal residence.Mary paid 3 points to reduce her interest rate from 6 percent to 5 percent.The loan is for a 30-year period.How much can Mary deduct in year 1 for her points paid?

Question

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Mary paid 3 points on a $200,000 loan, which equals $6,000 ($200,000 x 0.03). She can deduct 1/30th of this amount each year, which in year 1 would be $200 ($6,000 ÷ 30).

On April 1,year 1,Mary Borrowed $200,000 to Refinance the Original