"Srinivas Loke" <sriniloke[at]verizon.net> wrote:

- quote -

Sounds to me like it depends on how your pre-payment clause
was written in your contract. My suspicion is that it is a
penalty using the interest figure for calculation, and not
actually interest (given that there was no loan in effect to
generate interest).

If that is the case, no deduction. That said, take a look
at what they report to you as the interest paid, if it
includes this amount, I would get out the contracts and make
sure it passes a good sniff test before I reported it.

bex

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"Srinivas Loke" <sriniloke[at]verizon.net> wrote:

- quote -

a pre-payment penalty is considered as mortgage interest
paid; deduct in that section of your Schedule A.

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"Srinivas Loke" <sriniloke[at]verizon.net> writes:

- quote -

Yes. See Publication 936.

- quote -

Line 11 of Schedule A if it's not reported on Form 1098;
line 10 if it is.

- quote -

Beats me. Check your state instructions.

Phil Marti
Topeka, KS

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I have a question regarding income/state taxes for 2003. I
had mortgage with some bank and I decided to refinance it
with another lender but I had a pre-payment penalty clause
with the first bank where I took the loan. I ended up paying
the 3 month interest penalty and did a refinance with
another lender.

Question is: along with all the mortgage interests can I
also deduct the pre-payment penalty amount (it's not small
amount). If so, where exactly can I declare this amount on
the tax form. Also does it apply to both Federal and State
income taxes??

I'd appreciate any help regarding this matter.

Thanks

--
SL

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