A simplified scenario to help get my question across:
- I currently depreciate my closing costs for my rental property when I purchased it
- I depreciated costs over 30 years, the term of my original loan.
- Assume original costs were $5000
- Assume last year was 15th year, meaning I have depreciated $2500 and have $2500 left to depreciate over the remaining 15 years.
If I refinance this year (30yr) and incur closing costs of say $3000, for my current tax year:
- Do I recoup the remaining $2500 cost as a straight expense (not depreciated) from the original loan and then set up another 30 yr depreciation schedule for the refinanced costs? Or must I maintain two depreciation schedules for the two different costs?
I guess this question can go for any depreciated asset like a car/fridge etc. that we get rid of prior to it it being fully depreciated.
