Confusing advice on where to enter loan/closing costs for a STR

4 Replies

The advice is confusing in this regard.

All this is in regard to Turbotax. I'm trying to figure out where to enter the origination fees and closing costs for the loan I used to purchase the property.

Some say to enter this in "Property Profile", where you enter closing costs. Then it mainly becomes part of the cost basis and is depreciated over 27.5 years. But there is also a section in Expenses where you can enter refinance info, and then the costs get amortized with the loan. And when you refinance again, all the original closings costs can be deducted immediately.

Do I understand that correctly? So if I put it in Property Profile and it becomes part of the cost basis, what happens if I later refinance and have additional closing costs. Now I am depreciating one set of closing costs and amortizing the other.

Should I enter all my closing costs in the 'refinance' section so it gets amortized and if I refinance again I can deduct it immediately and start amortizing the additional expenses?

Or do I have to enter it in Property Profile and depreciate it, and if I refinance I just have to continue depreciating the original closing costs and amortize the new refinance costs?

Originally posted by @Adam Skwersky :

The advice is confusing in this regard.

All this is in regard to Turbotax. I'm trying to figure out where to enter the origination fees and closing costs for the loan I used to purchase the property.

Some say to enter this in "Property Profile", where you enter closing costs. Then it mainly becomes part of the cost basis and is depreciated over 27.5 years. But there is also a section in Expenses where you can enter refinance info, and then the costs get amortized with the loan. And when you refinance again, all the original closings costs can be deducted immediately.

Do I understand that correctly? So if I put it in Property Profile and it becomes part of the cost basis, what happens if I later refinance and have additional closing costs. Now I am depreciating one set of closing costs and amortizing the other.

Should I enter all my closing costs in the 'refinance' section so it gets amortized and if I refinance again I can deduct it immediately and start amortizing the additional expenses?

Or do I have to enter it in Property Profile and depreciate it, and if I refinance I just have to continue depreciating the original closing costs and amortize the new refinance costs?

 Neither. You need to add this as an intangible asset and amortize it. This is not related to refi. 

I think "refinance" costs are essentially the same thing as "loan" costs, right?
For the property profile I should put things related to the purchase of the property, e.g. recording fees, owners title insurance.
The loan costs need to be entered in a different place, amortized as part of a loan, but there is no separate place to enter "loan", just "refinance".
So if I were to look at my tax forms, where would I check to see that TurboTax put my loan costs in the right place?

Adam

Originally posted by @Adam Skwersky :

@Ashish Acharya , is form 4562, part VI Amortization the right place for the loan costs to show up and get amortized?

Turbotax has it there and amortizing over 30 years which is the live of the loan.

Yeah