Here's the simplicity of this.
- Cost associated with acquisition of the loan are amortized (not capitalized) and deducted (not depreciated) over time. Examples would include loan application fees, origination fees, and any other cost the bank required you to pay before they would give you the loan. Generally these costs are deducted over the life of the loan.
- Cost associated with acquisition of the property are capitalized and depreciated over time. Examples would include the title transfer fees and any other costs that are paid at the courthouse to transfer the title of the property to the buyer. Generally, these costs are added to the cost basis of the property and depreciated as "a part of" that cost basis.
