No, you should not divide the points paid by 30 and enter that amount on Schedule A. The deduction for points is determined based on the original issue discount (OID) rules and the de minimis threshold. The amount of points you can deduct each year depends on the OID and whether it is de minimis. You may need to use the constant yield method to figure the amount of points you can deduct each year. The deduction for points is not based on simply dividing the points by the number of years of the mortgage.
According to the retrieved information, points are generally considered prepaid interest and must be deducted over the term of the loan. The method used to figure the amount of points you can deduct each year follows the original issue discount (OID) rules. If the OID is de minimis, you have several options for figuring the amount of points you can deduct each year, including on a constant-yield basis, on a straight-line basis, in proportion to stated interest payments, or in its entirety at maturity of the loan.
Therefore, you should follow the appropriate method as outlined in the IRS guidelines rather than simply dividing the points by the number of years of the mortgage.
Sources:
§ 163. Interest
Publication 927 (2020)
Publication 551 (12/2022)
Rev. Proc. 87-15
Publication 936 (2023)
Publication 527 (2023)
Publication 530 (2023)
