the CPA messed up.
Loan expenses are amortized over the life of the loan. Expenses like, appraisal fees *if* required by the bank in order to secure the loan, as well as what the bank calls "origination fees" which may or may not include points. these are amortized over the life of the loan.
Whereas expenses incurred in acquiring the property are capitalized as part of its cost. then the total cost usually needs to be allocated between land (not depreciable) and building depreciated over 27.5 years. These would include such items title fees, title insurance and things like documentary stamps..
to correct the CPA's error in the current year's return would require filing form 3115.
here's a link to what Turbotax says about refinancing rental property:https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-credits-deductions/deduct-refinancin...
here's what it says
Unlike your primary residence, where you can only deduct qualified points and interest, you can deduct all costs associated with obtaining a new mortgage for your rental property. Typical loan-related expenses include:
- Points
- Loan origination and loan assumption fees
- Mortgage insurance premiums
- Application fees
- Credit report fees
- Appraisal fees (if required by the lender)
The costs associated with obtaining a mortgage on rental property are amortized (spread out) over the life of the loan. For example, if it cost you $3,000 to refinance your 30-year mortgage, you'd be able to deduct $100 per year for the next 30 years.
notice the items in bold contradict one another
my understanding is that for rental property
the same rules apply to the refi. loan expenses are amortized over the life of the new loan with the unamortized balance of loan expenses on the old loan written off.
there is another Turbotax thread about refi of rental property that contradicts the above Turbotax thread.
https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-can-you-continue-to-amortize-...
same lender: the remaining unamortized balance of loan expenses gets amortize over the life of the new loan. (I know this rule applies to a personal residence but I was unable to find confirmation this applies to rental)
wait to see how others respond.
