I had two questions on my first rental property that I recently bought
1. Can I deduct the closing cost in my rental property taxes for 2023. I just bought it in Nov 2023
2. To buy this property I had taken out a fixed line of credit against my primary. Can I put the mortgage interest as a deductible for my real estate property in Schedule E under other section.
The majority of these closing costs will need to be depreciated - there are a couple that you can deduct immediately in the tax year you purchased the property
Yes, provided the funds from HELCO were used to fund rental
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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.
Accountant · San Diego, CA · Member since 2019 · 1k+ posts · 552 votes
2y
1. Most likely yes
2. This would depend. I would suggest talking with a real estate-focused accountant to advise you where this line item goes on your return. Ideally just have them do it for you!
I had two questions on my first rental property that I recently bought
1. Can I deduct the closing cost in my rental property taxes for 2023. I just bought it in Nov 2023
2. To buy this property I had taken out a fixed line of credit against my primary. Can I put the mortgage interest as a deductible for my real estate property in Schedule E under other section.
It depends on what the closings costs are. Mortgage interest and real estate taxes are tax deductible, and the other closing costs are added to the basis in your property. I will recommend hiring a CPA for guidance.
The majority of these closing costs will need to be depreciated - there are a couple that you can deduct immediately in the tax year you purchased the property
Yes, provided the funds from HELCO were used to fund rental
.
.
.
*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.
I had two questions on my first rental property that I recently bought
1. Can I deduct the closing cost in my rental property taxes for 2023. I just bought it in Nov 2023
2. To buy this property I had taken out a fixed line of credit against my primary. Can I put the mortgage interest as a deductible for my real estate property in Schedule E under other section.
You bought it in November, but when was it ready & available for rent? If you were repairing it until January - nothing at all goes on your 2023 taxes.
1. Closing costs fall into 4 different groups, and only one of them is deductible. There is no simple answer, except "no, definitely not ALL closing costs"
2. Yes if the entire LOC was used for this rental property
I had two questions on my first rental property that I recently bought
1. Can I deduct the closing cost in my rental property taxes for 2023. I just bought it in Nov 2023
2. To buy this property I had taken out a fixed line of credit against my primary. Can I put the mortgage interest as a deductible for my real estate property in Schedule E under other section.
You bought it in November, but when was it ready & available for rent? If you were repairing it until January - nothing at all goes on your 2023 taxes.
1. Closing costs fall into 4 different groups, and only one of them is deductible. There is no simple answer, except "no, definitely not ALL closing costs"
2. Yes if the entire LOC was used for this rental property
Hi Michael, Thanks for getting back to me. For closing costs is there a list I can find that defines the 4 different groups. The property was already rented so I bought it with the renter. On point 2 yes the entire LOC was used for this rental property.
The majority of these closing costs will need to be depreciated - there are a couple that you can deduct immediately in the tax year you purchased the property
Yes, provided the funds from HELCO were used to fund rental
.
.
.
*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.
Thanks, Sean for getting back to me. Can you give me the details of which closing costs can I immediately deduct? On point 2 yes the entire fund was used to fund the rental.