Points paid on purchase of principal residence - tax deductible?

Question

I bought a house last year (in Colorado) and have now received a Form 1098 from the mortgage company showing the mortgage interest I've paid. Line item 2 on this form is Points paid on purchase of principal residence and I'm not sure whether I can claim this as part of my itemized deductions when filing tax returns.

The amount shown on this line is exactly 1% of the total mortgage amount, and some digging around the loan documents shows that this amount is listed there as Loan Origination Charge which was paid by the seller.

I've contacted the mortgage company about this, but they were unwilling to give me any tax advice. Google search results for the above seem to indicate that I should be able to claim that amount on my tax return regardless of whether it was paid by me or the seller. Is this correct?

Answer 1

My friend and tax-crush Kay Bell wrote an article that addressed this very well at Don't overlook tax break of mortgage points. (The short answer is yes, you most likely can. Read the article for full details.)