For cash-basis taxpayers who itemize, IRS Topic 504 and Pub. 936's 2025 examples say refinance points are generally 'deducted ratably over the term of the loan,' not all in the year paid. Amounts charged for services are not deductible points.
The year-paid deduction requires all six Topic 504 tests: mortgage is to buy/build/improve principal residence; residence secures loan; paying points is established practice; points not above area charges; paid from unborrowed funds at closing; and computed as percentage of principal and clearly shown on settlement statement. For refinancing, proceeds must be used to substantially improve the home; only allocable points are deductible in year paid.
Pub. 936: 'If you spread your deduction for points over the life of the mortgage, you can deduct any remaining balance in the year the mortgage ends. However, if you refinance the mortgage with the same lender, you can't deduct any remaining balance of spread points. Instead, deduct the remaining balance over the term of the new loan.' A mortgage ends early due to prepayment, refinancing, foreclosure, or similar event.
Primary sources
Publication 936, Home Mortgage Interest Deduction