@Carl
The items that can be used as cost basis when buying a personal home don't get amortized over 30 years, they just get added to the basis.
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Abstract fees (abstract of title fees),
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Charges for installing utility services,
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Legal fees (including fees for the title search and pre- paring the sales contract and deed),
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Recording fees,
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Survey fees,
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Transfer or stamp taxes, and
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Owner's title insurance.
(Other closing costs are not deductible and are not included in the basis, for a personal buyer.)
Now, if I pay those fees on a refinance, they either get added to the basis again, or they are disregarded. I think they are added to the basis. They are not amortized over the life of the loan on personal property.
I agree that if this taxpayer refinances again after turning the house to a rental, those costs would be amortized. But I think for purposes of calculating "the lower of his present cost basis or FMV" for depreciation, he would be entitled to include the original purchase price, listed original closing costs, improvements, and the closing costs on their refinances prior to placing the home in service as a rental.
