How do I do taxes for a buy, fix, and hold property?

2 Replies

Hello,

I bought a rental property in Texas last year with hard money. I then fixed it up and refinanced into a 30 year conventional loan. My question is how do I go about reporting this on taxes?

Do I need to claim the purchase with the hard money and then the refi? I'm a little confused since this was my first purchase using hard money.

Thanks for your help.

Joel

I am not a tax professional.  You could get one to do your taxes.  But here is my answer.

Taxes are an expense.  Any interest in an expense.   

Other closing costs are likely the cost of acquisition.

Not a tax pro, either. All costs of rehabbing/fixing before it's put into 'use' as a rental add to your cost-basis. They are not expensed in the year created. As far as financing, most costs are spread out over the life of the loan. I've never done a HML (thankfully!), so I don't know if all those enormous origination costs can be expensed or not. My guess is not, since the property wasn't yet put into use. Probably tack those on to your cost-basis as well. That would be my default until I heard differently from a pro. Good luck!

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