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VDR
Returning Member

Amortizable assets in rental apartment in a co op

When renting out a coop apartment, my share of the coop's underlying mortgage (as opposed to my own mortgage) is added to my depreciation basis and depreciated.  But what about the coop refinance cost?  The coop Financial Statements show "Refinance Cost" in the Asset, which is amortizable.  Do I get to amortize my pro rata portion of that cost as well?

 

My rationale is that since I'm allowed to amortized refi cost of my own mortgage, and since I'm required to add my portion of the coop mortgage to the depreciation basis, I should similarly be able to amortize my portion of the refi cost of that coop mortgage.   But does anyone have a more definite knowledge?

6 Replies
ReginaM
Expert Alumni

Amortizable assets in rental apartment in a co op

It depends.  Was the loan secured by the apartment coop complex?   Was the loan used for the apartment coop complex, and not used for something else?  To determine if you can claim these deductions, follow these steps in TurboTax:

  1. Select Search in the top right of your screen,
  2. Type Mortgage interest,
  3. Select Jump to Mortgage Interest,
  4. Go through the Questions and Answers for the Refinance.

For more information see Publication 17, page 169.

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VDR
Returning Member

Amortizable assets in rental apartment in a co op

Thanks a lot!  They call it a mortgage, so it has to be secured by the building itself.  And the coop cannot really spend the loan money on anything else but on the apartment complex itself.  The coop financial statements don't provide much details, but from what I know, big part of it was a refi of prior mortgages, one of which were used for a past capital improvement and another is a refi itself of a decades old mortgage; part of the new mortgage has been used for most recent cap. improvements, and finally the last part is sitting in reserve for future capital improvements.

 

The only relevant part in pub. 17 that I found was this.  "If you are ...  a tenant-stockholder in a coopeerative housing corporation, you are treated as having paid your proportionate share of any costs of the association or corporation."  Not sure if it gives me more clarity but it let to another question - what other items from coop financial statements I can take advantage of.  I know I should take my portion of the mortgage, addition to paid-in capital, and capital improvements and add them to my basis.  But is there anything else that could be either amortized, capitalized or expensed directly?  For example, can I deduct my portion of coop's depreciation and amortization?

ReginaM
Expert Alumni

Amortizable assets in rental apartment in a co op

You are welcome!

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ReginaM
Expert Alumni

Amortizable assets in rental apartment in a co op

You are welcome!

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Carl
Level 15

Amortizable assets in rental apartment in a co op

I should similarly be able to amortize my portion of the refi cost of that coop mortgage.

Oh you absolutely can and should. Just keep in mind this is treated as a completely separate asset on your tax return that gets amortized and deducted over the life of "that" particular loan.

VDR
Returning Member

Amortizable assets in rental apartment in a co op

Thanks!  That's what I was hoping for.  What else can be taken from the coop financial statements?  I'm  looking at the Building (net of Land) and increases in accumulated depreciation on the coop's Balance Sheet. The Building line item must represent the original cost of the building when it was built many decades ago, before I was there.  Still, it's a depreciable asset, can I depreciate my portion of it on Sch. E?  Or can I use/deduct coop's annual depreciation?  Or both?

 

On the Income Statement, my feeling is I probably can't do much with the expenses because I already essentially deduct them by deducting my coop maintenance payments.  But what about the rest of the Financial Statements items, the Balance Sheet, notes, etc? I already added Additions to Paid-in Capital, which are mentioned directly in IRS publications.  Someone also advised me I can depreciate increases in property improvements and equipment that occurred while I owe the apartment. Now I'm adding coop mortgage cost.  What else can be utilized from the coop statements?

 

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