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Can I deduct previous points/fees on the loan for my Rental Property?
I refinanced my Rental in 2015. I previously did a refinance in 2012 and was amortizing the points/fees. I want to deduct/bring forward the remaining amount. When I click on the "edit" in the Asset Summary page and tell it that I have sold/disposed of the asset, it continues to amortize it. What am I doing wrong?
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Can I deduct previous points/fees on the loan for my Rental Property?
Remove and list prior amortization as an expense. My assumptions for this example: Old loan fees placed in service 6/1/2012. New loan fees placed in service 6/1/2015. Old Loan fees $2k, half-year conv.
1st Part: Your Property Assets page- Along with your rental, you should see your 2012 refinancing fees and the depreciation amount. Select Edit. Continue through page descriptions of prior fees. Check box, the item was sold, retired or disposed of and the date of your new fees as the date sold, 6/1/2015. Continue to Confirm your Prior Amortization page. Select Yes on the Special Handling Required page, because the last option is true. Continue to next page and select radio button Transfer these fees for me to Other Expenses. View Sch. E (page 1) in forms mode to verify remaining depreciation and transfer to Other Expenses.
End result: Current depreciation amount for old loan $56. $1600 remaining unamortized balance to be transferred to other expense line. Your old fees may still show on the asset page if you still have some depreciation for the current year (as is the case for my example), but it will not be listed there in 2016.
2nd Part: Add your 2015 New Loan Fees as a new asset. On the Your Property Assets page, click Add an Asset link to enter data for new loan fees, 6/1/2015.
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Can I deduct previous points/fees on the loan for my Rental Property?
Remove and list prior amortization as an expense. My assumptions for this example: Old loan fees placed in service 6/1/2012. New loan fees placed in service 6/1/2015. Old Loan fees $2k, half-year conv.
1st Part: Your Property Assets page- Along with your rental, you should see your 2012 refinancing fees and the depreciation amount. Select Edit. Continue through page descriptions of prior fees. Check box, the item was sold, retired or disposed of and the date of your new fees as the date sold, 6/1/2015. Continue to Confirm your Prior Amortization page. Select Yes on the Special Handling Required page, because the last option is true. Continue to next page and select radio button Transfer these fees for me to Other Expenses. View Sch. E (page 1) in forms mode to verify remaining depreciation and transfer to Other Expenses.
End result: Current depreciation amount for old loan $56. $1600 remaining unamortized balance to be transferred to other expense line. Your old fees may still show on the asset page if you still have some depreciation for the current year (as is the case for my example), but it will not be listed there in 2016.
2nd Part: Add your 2015 New Loan Fees as a new asset. On the Your Property Assets page, click Add an Asset link to enter data for new loan fees, 6/1/2015.
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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Can I deduct previous points/fees on the loan for my Rental Property?
Don't mark that box unless you sold your rental. You will enter the unamortized portion of your prior points in the Expenses section of your Rental Summary.
Continue and you will reach the Want to Review Your Refinance? page. Answer Yes to the first box and continue. From here you will enter the new mortgage info. Continue and you will reach Deduction Amounts Results. Mark the first button, I have prior refinance fees let's take care of this now. Proceed through interview.
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Can I deduct previous points/fees on the loan for my Rental Property?
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Can I deduct previous points/fees on the loan for my Rental Property?
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Can I deduct previous points/fees on the loan for my Rental Property?
Refinance Fees from Prior Refinances
Charges paid by a borrower to get a mortgage refinance for a rental must be amortized over the life of the loan. In the year you refinance to a new loan (and retire the prior loan), any existing refinance fees from any prior refinances become an expense and need to be entered in as an "Other Expense" item. If the mortgage is financed with the same lender, the unamortized fees on the first loan must be deducted over the term of the new loan.
How Do I Do This in TurboTax?
Points are entered in the same area of interview where you track the depreciation of your rental property, or rental furnishings. Go to the Asset/Depreciation topic and indicate your prior loan fees are no longer in service. As you go through this area of interview you will be given the remaining fees that have not been expensed or amortized. These additional expenses need to be entered as an "Other Expense" item. TurboTax will help guide you along the way. Completing this is a three-step process:
1) Enter your new refinancing information as an amortizable intangible
2) Navigate to the Depreciation Section in Rentals and indicate you have retired ("disposed" of) the old refinance fees
3) Calculate the unused portion of the old refinance fees and enter them as an "Other Expense"
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Can I deduct previous points/fees on the loan for my Rental Property?
Thanks again PaulaM!
That is exactly what I did several times on both Premier and Home and Business (I upgraded thinking that might be the issue). it doesn't want to go here..."Continue to next page and select radio button Transfer these fees for me to Other Expenses."..... Even when I had the TurboTax guy (on the phone , accessing my screen). We finally just bypassed the Interview and input it straight to the forms. He couldn't understand why either. The same thing happened to my purchase of a dishwasher which is under the $2500 safe harbor election, it placed it as an asset, as well, even though I told it that I want to take the full expense option.....so while am confident that I have it correct on the forms now, it won't work in the interview process.
I tried to make a scenario on the "Online Version" of Home and Business, and it worked exactly as you showed. Which is why I upgraded.
This has definitely been frustrating and a head scratcher.....
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