Hi Carl – thank you for this very helpful detail.
As background, the property in question was purchased as a rental property several years ago and has been used solely as a rental property throughout the time I have owned it.
You prefaced your response by saying that the detailed steps you were providing assume that the original acquisition loan costs were entered correctly for the year the property was purchased.
I'm not sure this was correct, but the way I entered the acquisition financing costs was to include them together with the purchase price and other loan closing costs as the original basis for the property and that combined amount has been being amortized over the 27.5 year useful life of a rental property ever since.
Based on the detailed steps you provided following your preface, it sounds to me like that approach wasn’t the correct way to enter acquisition financing costs and that I should have entered them as a separate intangible asset separate from the property and other closing costs, is that right?
If so, is there a way now to reduce the property asset basis currently in TurboTax for this asset by the original financing costs and set those costs up this year as a separate asset noting the year it was put into service (the original purchase date) and then retire it in the year the loan was refinanced?
Thanks,
Gary
