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    #1

    Pre-payment penalties

    Client just emailed with this question. If he refinances his mortgage, can he deduct the pre-payment penalties on his tax return?

    I am not sure what pre payment penalties would be considered. Any one have any thoughts?

    Linda F
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    #2
    Yes

    A prepayment penalty is deductible as interest, if it otherwise qualifies as deductible interest ... i.e. not over the qualified limits, etc. The lender should include the prepayment penalty amount in Box 1 of F-1098, as per the instructions to that form.
    Roland Slugg
    "I do what I can."

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      #3
      Thanks

      Roland. You are a great help on this board.Glad you are around.

      Linda F

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