Seller-Paid Points

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DEFINITION of 'Seller-Paid Points'

Any points paid by the seller of a home for the buyer. Seller-paid points are always deducted by the purchaser of the home. These points are offered as a purchase incentive for the prospective buyer and can provide the buyer with a lower rate as a result.

INVESTOPEDIA EXPLAINS 'Seller-Paid Points'

Seller-paid points effectively reduce the basis of the home price for the buyer by the dollar amount of the points paid. Homebuyers who purchased their homes between January 1, 1991, and April 4, 1994, should reduce their basis only if they deducted the points as mortgage interest in the year of purchase. Buyers after this date must reduce their basis by points paid regardless of whether they deducted the points or not.

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