Pre-paid Mortgage Interest

• Interest on mortgages is paid in advance. Interest that accrues from the day of settlement until the day the first mortgage payment is due is charged to the buyer as prepaid interest at the time of settlement. This closing cost is deductible.
  
  

Mortgage Points

• Mortgage points are a one-time charge paid to the lender by the home buyer, in order to reduce the mortgage interest rate. One mortgage point is equal to 1 percent of the mortgage loan amount. If mortgage points are paid at the time of settlement, they are deductible.
  
  

Pro-rated Property Taxes

• The home seller is responsible for property taxes up to the day before settlement. The home buyer is responsible for property taxes beginning on the date of settlement. If the seller has prepaid property taxes past the date of settlement, those taxes are charged back to the buyer at settlement. This closing cost is deductible.