Matthew Purchases a New Principal Residence in the Current Year

question 96

Multiple Choice

Matthew purchases a new principal residence in the current year and pays points of $2,000 to obtain a mortgage loan. What is the proper tax treatment for the points paid?

• A)The points are a nondeductible personal expense.
• B)The points must be amortized over the life of the loan.
• C)The points are fully deductible in the current year.
• D)The points must be capitalized into the cost of the residence.
• E)The points must be amortized over 5 years.