Which of the Following Statements Regarding the Tax Deductibility of Points

question 109

Multiple Choice

Which of the following statements regarding the tax deductibility of points related to a home mortgage is correct?

• A) Points paid in the form of a loan origination fee on an original home loan are deductible over the life of the loan.
• B) Points paid in the form of prepaid interest on an original home loan are deductible over the life of the loan.
• C) Points paid in the form of prepaid interest on a refinance are deductible over the life of the loan.
• D) None of these statements is correct.

---

Definitions:

Nucleophilic Acyl Substitution

A reaction where a nucleophile replaces the leaving group in an acyl compound.

Carbonyl

A functional group consisting of a carbon atom double-bonded to an oxygen atom \(\text{C=O}\).

Leaving Group

An atom or group that departs with a pair of electrons in a chemical reaction, making a bond-breaking step feasible.

Alkoxides

Anions formed from the deprotonation of alcohols, typically represented as RO-, where R is an alkyl group.