Finance
In New York, points paid on a purchase money mortgage are generally:
ANot deductible under any circumstances
BDeductible in the year paid as interest (for federal income tax purposes)✓ Correct
CAdded to the cost basis of the property
DRefundable if the loan is paid off early
Explanation
For federal income tax purposes, points (prepaid interest) paid on a mortgage used to purchase a principal residence are generally fully deductible in the year paid, provided they meet IRS criteria (established practice in the area, not exceeding normal points, etc.). This is also generally consistent with New York State income tax treatment.
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