There are two types of closing costs associated with rental property, and from my experience, the program is effective on dealing with only one type on a consistent basis.
- Coats associated with acquisition of the property are added to the cost basis of the property. An example of this would be the title transfer fees paid at the courthouse to remove the seller's name from the deed and replace it with the buyer's name. The program seems to handle these just fine, *IF* entered correctly in the program.
- Cost associated with acquisition of the loan are amortized and deducted over the life of the loan. An example would be points paid at the closing, as well as the property survey fee if the lender required a survey as a condition of the loan. If the program does not enter these costs correctly in the assets/depreciation section, (it usually doesn't in my experience) then you will have to enter those amortized costs manually.
Here's how to enter the points 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
