Basically, it works like this.
- Cost associated with the acquisition of the property are added to the cost basis of the property. For example, the title transfer fees you pay to get the property titled in your name at the courthouse where the property transfer is recorded. The TTX program does a pretty descent job of doing this for you, if you work through the program the way it is designed and intended to be used and pay particular attention to the small print on each screen.
- Cost associated with the acquistion of the loan are amortized (not capitalized) and deducted (not depreciated) over the life of the loan. An example would be loan application fee, mortgage points as well as appraisal fees if the bank required an appraisal before they would consider your loan application. The TTX program does *NOT* separate these cost out for you. To enter those costs associated with the loan select the "Add an Asset" button, select "other" and work it through. When asked for the specific code that applies, its code section 163. When asked for length of time, it's the life of the loan. Commonly 15 years or 30 years.
