Rental Property Investor · Orlando, FL · Member since 2015 · 353 posts · 269 votes
Hello BP community. I am in the process of opening a Home Equity Line of Credit on one of my long term rental investment properties. The closing costs are going to be about 1% of the line of credit value. Since this is opened on a rental property, can I deduct it from my rental property income on my taxes? Thanks!
Accountant · Dallas, TX · Member since 2016 · 161 posts · 75 votes
3y
Not specific advice, but we typically will amortize the 'loan closing costs' over the life of the loan. In the year of sale we will amortize the remainder if any is left. This would show up as an asset on the depreciation schedule.
Lender · Catskills / Hudson Valley / Greater NYC Metro · Member since 2023 · 24 posts · 11 votes
3y
Hi @Matt Leber, they probably wouldn’t be deductible directly on your income taxes per se, but they might be added to your cost basis and deducted through depreciation. Definitely going to want to talk to a CPA or tax attorney about that one.
Accountant · Dallas, TX · Member since 2016 · 161 posts · 75 votes
3y
Not specific advice, but we typically will amortize the 'loan closing costs' over the life of the loan. In the year of sale we will amortize the remainder if any is left. This would show up as an asset on the depreciation schedule.
Hello BP community. I am in the process of opening a Home Equity Line of Credit on one of my long term rental investment properties. The closing costs are going to be about 1% of the line of credit value. Since this is opened on a rental property, can I deduct it from my rental property income on my taxes? Thanks!
@Curt Riffel gave you a good technical answer. Under one important assumption, however: that the HELOC is going to be used exclusively for business purposes, such as capital improvements to this rental or a purchase of another one.
All deductions, including amortization, are tied to the use of the proceeds, as opposed to a property listed as a collateral. If you use this HELOC to buy a boat, for example - nothing is deductible.