Originally Posted by Wnhough
“So my question is how about lender paid point? Can I deduct it over the life of the loan as long as I've reduced the basis of the rental house by the amount of the lender paid point? It seems to me the answer should be yes but I really can not find a good answer anywhere.”========> On a loan to purchase an investment rental property , points (sometimes called loan origination fees or discount points) are tax deductible but not as a whole in the year the property is purchased. Points that are paid for a residence that is not your primary must be amortized over the life of the loan. You will do this in the same place that you set up depreciation for the rental property. If you sell the property and the loan is paid off or you refinance before the loan term is due then whatever points expense is left would be an interest expense tax deduction in that year
Thanks for your kind reply. I fully understand what you have said. But my main question is what if the lender paid point (origination fee)? In other words, the points are shown as negative number on HUD (which means that the lender, not the buyer, covers the cost for the point).