Claudia refinances her home mortgage on June 1 of the current year. She obtains a 30-year mortgage at 5%. As part of the refinancing, she pays points of $3,600 (a customary practice in her location). What amount, if any, of the points are deductible?
A) $0
B) $70
C) $120
D) $3,600
B) $70
Points on the purchase of a home are currently deductible, but when incurred as part of a refinancing transaction, must be amortized over the life of the loan. $3,600/(30 × 12) = $10 monthly amortization. $10 × 7 months = $70
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