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Charlotte Said:

Is this email a scam? Says it's from Paypal?

We Answered:

If you did not make this purchase, then it must be a phishing email/scam.

Check your credit card account to see if any purchase has been charged.

Also, forward the email to spoof@paypal.com . I get different types of fake paypal emails from time to time and always forward them to spoof@paypal.com for their records and possible research into the scam.

Alex Said:

Can I claim points paid by the seller at closing on my taxes?

We Answered:

It's always good to see someone who has done some solid research before asking a question! Your analysis is correct, and shows that your points are eligible to be deducted as interest. On your specific items #2-3: two points (2%) is well within the range of "established business practice" in most areas and would not be questioned by the IRS -- you could ask your real estate agent or lawyer if you want local reassurance.

On the "cost basis" of the house, you are correct in saying that you must reduce the stated cost of the house by the amount of points paid by the seller. For example, suppose the house cost $200,000 plus two points ($4,0000). You paid a total of $200,000 (including mortgage funds from the bank) to the seller, then the seller paid $4,000 to the bank. Since you didn't come up with $204,000 yourself, but only $200,000, then the amount you paid is $4,000 in points plus $196,000 for the house. That $196,000 is the "cost basis," which you must use as the cost of the house when you claim the home-buyer credit. This is so that you are not claiming tax benefits twice on the $4,000 -- once when deducting points and again when claiming the tax credit. If you decide not to deduct the $4,000 points paid by the seller, your "cost basis" for the house will be $200,000. Of course, your numbers will differ from this example, but none of the other numbers in your closing statement (for broker commissions, survey, prepaid property taxes, etc., etc.) will affect the outcome of your analysis.

Good luck in your new home!