Costs associated with acquisition of the property are added to the cost basis of the property. In the case of refinancing a rental property you already own, you have none of these costs.
Cost associated with acquisition of the loan are amortized (not capitalized) and deducted (not depreciated) over the life of the loan.
If you are still amortizing costs from the first loan:
- If the new loan is with the same lender, then leave them there in the Assets/Depreciation section. You must continue to amortize for what would be the remainder of that first loan.
- If the new loan is with a different lender, then work through that specific asset to show that you stopped using it in 2020. Then any remaining costs on the old loan to be deducted are fully deductible in the year of the refi. If you make the property selection (It's self-evident) those costs will be transferred to Miscellaneous Expenses in the rental expenses section.
here's how to enter the amortized costs on the new loan in the Assets/Depreciation section.. (does not apply to entering the property itself, or any other property assets.)
- Select the Add and Asset button. (go straight to the asset summary if presented that option)
- Select Intangibles/Other Property, then continue.
- Select Amortizable Intangibles, then continue.
- Describe it as something like "2020 Financing Fees". Then enter the amount, and the closing date of the loan. Then continue.
- Select "purchased new", then "100% business use", enter the closing date of the loan (again), then continue.
- Code section is 163:Loan Fees, then continue.
- Useful LIfe in Years is the length of the loan, then continue.
- You can "show details" if you like. Then continue, and that does it
