I’m not going to lie. Taxes and mortgages are two topics that can make anyone’s brain buzz. Have you ever wondered why you stare at your mortgage statement and think, “Why does this number feel like a life sentence?”
As we move into 2026, mortgage points are suddenly everywhere. People are talking about deductions, interest, and future tax years. It is a lot to take in. Still, if you are already looking ahead and wondering whether mortgage points are deductible in 2026, congratulations. You are thinking smart. This is where Reliance Financial is here to help take care of you.
Mortgage Points? The Funny Talk No One Explains
Think about it. You just closed on your dream home. You are celebrating with your favourite food because the down payment wiped out your savings.
Then your lender casually says, “By the way, you bought mortgage points. They might help with your taxes.” You nod as if you understand, but deep down, you know you do not. Next thing you know, you are googling, “What even are mortgage points?”
Funny, right? I did the same thing back in the day.
So let’s decode it!
Okay, What Exactly Are Mortgage Points?
Complicated as it sounds, mortgage points go by another name. Sometimes they are called discount points. They are essentially prepaid interest, which means you pay extra money upfront to lower your mortgage interest rate.
It is like trading short-term pain for long-term relief. One point usually equals one percent of your total loan amount.
For example, if your mortgage is $400,000, one point costs $4,000. In exchange, your lender might knock 0.25% off your interest rate.
The 2026 Twist (Tax Laws Love Drama)
Since we are in 2026, things get a little interesting. The IRS, or Internal Revenue Service, is the U.S. government agency that collects taxes and makes sure tax laws are followed. It allows a mortgage interest deduction for most homeowners when the loan is used to buy, build, or substantially improve a primary home.
This means that prepaid interest, which includes mortgage points, is typically deductible. That said, tax laws can change.
It is not like 2025, which still includes several provisions from the Tax Cuts and Jobs Act, or TCJA, that are set to expire. The 2026 tax season could look different.
We are talking about changes to itemised deductions, mortgage interest caps, and possibly even standard deduction limits. But the real question is whether mortgage points will still qualify.
The “Reliance Financial” Angle
If you are struggling to find mortgage advisors who can make complicated topics easy to understand, let’s bring Reliance Financial into your journey. They are the kind of advisors who make the financial process feel less overwhelming and more approachable.
What I liked about Reliance Financial is how they break things down. Their explanation is simple. You do not just pay points to “save money.” You are essentially betting on how long you plan to keep the loan. If you expect to sell or refinance within a few years, those upfront points might not pay off.
Their mortgage advisors show you the timeline where the lower interest rate starts saving you more than the cost of the points. This breakeven period also matters for your taxes.
If you refinance or sell before the points are fully used, you cannot deduct everything in one go.
Wait, Deduct All at Once or Over Time?
This is where many people mess up. You can usually deduct the full cost of your mortgage points in the year you paid them only if all of the following apply:
- The loan was for your primary home
- Paying points is a normal practice in your area
- The amount is clearly shown as “points” on your closing statement
- You use the cash method of accounting for your taxes
If not, you have to spread the deduction over the life of the loan. That is the IRS saying, “Nice try, but let’s not get too excited.”
For example, let’s say you take out a 30-year mortgage in 2025 and you paid $6,000 in points. In that case, you can generally deduct $200 per year over the life of the loan, unless the home is your primary residence and you meet the IRS checklist that allows a full deduction upfront.
But It’s 2026, So What’s Different?
If I am being honest, I wish I had a clear, engraved answer. We are now in 2026, and assuming Congress does not make major tax reforms, there is a good chance we could revert to pre-2017 deduction rules.
If that happens, it could mean:
- Stricter limits on the mortgage interest deduction
- Potential caps on loan amounts
- Adjustments to itemised versus standard deductions
For homeowners, keeping good records such as settlement statements, Form 1098, and documentation from lenders like Reliance Financial will be a big advantage.
They are especially good at providing clean breakdowns of what is deductible and what is not. If you have ever looked at a mortgage statement and wanted to throw it across the room, you will appreciate that level of clarity.
2026 Planning Tips (Because You’ll Thank Yourself Later)
- Keep Every Document: When it comes to paperwork, the IRS loves it. Save your closing disclosures, Form 1098, and anything that shows what you paid in points.
- Talk to a Pro Before You File: When it comes to financial decisions, do not cut corners. Mortgage deductions can get messy fast. A CPA who is up to date on 2026 tax codes can save you from headaches, and the right one can save you money.
- Check Your Break-Even Math: If you plan to sell or refinance soon, paying points may not make sense. Reliance Financial’s loan estimators are great for visualising this.
Conclusion
Here is my final word on mortgages.
Mortgage points in 2026 are not as confusing once you slow down and understand how they work. If you used them on your primary home and paid them upfront, there is a good chance the deduction still applies. That said, nothing should be taken for granted, since tax rules after 2025 can shift in unexpected ways.
That is why it is smart to keep every document, avoid assumptions, and talk things through with a tax expert or with a lender like Reliance Financial before locking anything in. When you understand the numbers early, tax season stops feeling overwhelming and starts feeling manageable.
FAQs About Are Mortgage Points Tax Deductible in 2026
Are mortgage points still deductible once 2026 arrives?
From where we stand, yes. The IRS still sees points as prepaid interest. If you’re buying a primary place to live and you check the usual boxes, you and I can reasonably expect that write-off to survive into 2026.
What if Congress reshuffles tax rules after 2025 ends?
That’s where things wobble. When TCJA provisions sunset, earlier limits may sneak back in. Loan size ceilings, itemising hurdles, interest caps — all potential movers. We suggest you stay alert, because official IRS guidance usually lands before filing season chaos begins.
Can you deduct every point immediately?
Sometimes yes, sometimes spread thin. You qualify for full upfront treatment only when strict IRS conditions line up — main residence, cash payment, clear listing on settlement paperwork. Miss one piece, and you and we are looking at amortisation instead.
Refinance points — instant benefit or slow drip?
Usually, the slow path. Refinancing triggers gradual deductions across the loan’s lifespan. However, if you refinance again using the same lender, remaining unused points might suddenly become deductible in that specific year. Strange, but helpful.
Second homes or rentals — same tax magic?
Not quite. Vacation places and income properties don’t enjoy the same treatment. Immediate deductions disappear. You and we may still apply amortisation as an investment expense, though rules shift depending on usage.
How do you know whether paying points is smart?
Time decides everything. If you plan to stay long enough, savings may outpace the upfront hit. We usually recommend running numbers through a calculator — Reliance Financial offers one — to uncover the break-even point before committing.
Any paperwork traps you should expect?
Nothing exotic, just essential. Your lender sends Form 1098. Closing documents matter too. If you itemise, Schedule A becomes your stage. We advise keeping everything organised long before filing pressure arrives.
Can Reliance Financial guide the strategy?
Absolutely. They help you, and we understand whether points actually work in your favour, while clearly explaining tax consequences. Still, they aren’t CPAs — so pairing their insight with a tax professional keeps your 2026 plan clean and defensible.
