Expenses related to acquisition of the property are added to the cost basis of the property. An example would be the title fees paid at the courthouse to remove the seller's name from the deed and replace it with the buyer's name. Since this is a refinance, you don't have any of these expenses.
Expenses related to acquisition of the loan are amortized and deducted over the life of the loan. An example of this would include origination fees or points paid on the loan. Would also include the cost of a property survey if the lender required it as a condition of approving the loan. Expenses for this are entered in the assets/depreciation section as an amortized (not capitalized) expense and deducted (not depreciated) over the life of the loan. Typically, that would be a 15 year or 30 year loan.
ENTERING POINTS
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
