Origination Fees

[JohnH]

I think the HUD-1 shenanigans prove (even more so than some tax returns), that figures don't lie but liars can figure.

[smithtax]

I agree, generally, with what you are saying, but in this case and in nearly every one I have seen this year, the points were "credited" or subtracted from the origination fee, so there is no deduction, as they were not paid. This is apparently common practice now for the lenders, for what purpose, I do not know. Not sure what the reference to appraisal fees was, except for general information, as these are not deductible either. They are capitalized with other closing costs to the basis of the property.

I agree that the origination charges are not deductible, since they represent a lender's fee to process the loan, but it seems to me that since the 'net' origination charges are paid by the borrower, then essentially the points have been paid that allow the credit in reducing the gross origination charges. In other words, the gross origination charges are not deductible, but the points are.

Regarding the appraisal fees, I merely referenced the line instructions for the HUD-1. The description for OP's Line 803 were stated as "your adjusted origination charges" whereas the line description in the HUD-1 instructions states Line 803 as "appraisal fees". Go figure. Apparently the lender has flexibility in describing their settlement statement charges.

I am familiar with the capitalization rules regarding acquisition of real property.

[taxea]

this explains the whole shebang in plain English

http://www.bankrate.com/brm/itax/tax_adviser/20060621a1.asp