Refinancing & Depreciation

[Becky Watkins]

I refinanced my owner-occupied multifamily rental property last year and now I'm struggling on exactly how to report the closing costs. I have tried researching previous posts and other sources, but I haven't found anything that is directly related (Im not asking about the personal portion, a cash out, etc).

So one thing says to amortize the points, but that's just a small portion. Another thing says to amortize anything that had to do with processing the loan. Another thing said that credit report and appraisal fee doesn't count. 

Also, would it be its own line that starts depreciating as of the date of the refinance (settlement or disbursement date?) or do I add it to the original basis? But what about the years of depreciation that already passed?

And then would the land basis be based on the original purchase date or what the ratio is at the time of the new loan?

Thanks so much. Every year, depreciation is the bane of my existence. I thought I had it under control but then I had to go and refinance. ;)

[Michael Plaks]

@Becky Watkins

It's not depreciation but its cousin, amortization. 

• Take all closing costs except currently deductible carrying costs like interest, taxes and insurance.
• Set it up for amortization over the length of the new loan, starting on refi date.
• There is no land allocation involved,
• Whatever is left of the old loan costs should be deducted now.