I’m filing amended tax returns for my rental property and would like to resolve this. I’ve been looking for a while, but I can’t seem to find an answer.
Here’s the situation and associated timeline:
2017: property bought as primary residence (no points)
2020: mortgage refinanced to lower rate (no points, no cash out)
Early 2021: mortgage refinanced again to lower rate (no points, no cash out)
Mid 2021: property converted to rental
For taxes, I already did the following:
- For 2017, 2020 and 2021 deduct any mortgage interest in the year it was paid
- For rental, add 2017 property acquisition cost to the basis of the property for depreciation
- For rental, amortize 2017 loan acquisition cost over the duration of the loan
But I don’t know what to do with the rest of the refinance costs (title fees, legal fees, recording fees, survey fees .. etc). MY QUESTIONS: can these refinance costs also be amortized for the rental (similar to the loan acquisition cost of the original mortgage) even though refinance happened before the property was converted to rental? If yes, can I amortize the cost of both 2020 and 2021 refinances, or just the latest one?
I’m not asking about the mechanics of doing this on TT, but the actual IRS rules and what’s allowed.
Thanks.
