closing costs on paid off/refinanced loan

[JenniferS99223]

I refinanced a rental property in 2016 and have been amortizing the points properly on the refi loan since then, no issue with that.

However, I just realized that I didn't claim the remaining amortizable costs on the *previous* loan that was paid off by the 2016 refi - I just stopped amortizing the prior loan's closing costs that year, and there's a significant balance left that was never amortized/deducted :( 

Of course it's too late to claim a refund for this 2016 activity at this point.  Can I add the remaining (never-claimed) closing cost balance to the basis when I sell the property, or is there now nothing I can do with the closing costs that were paid for the previous loan but never amortized/deducted after the loan was paid off?

Thanks for any advise/suggestions! 🙂

[Carl]

Regardless of weather you refi'd with the same lender or a different lender, if the amortized costs of the original loan are still being deducted over the life of that original loan, then leave well enough alone and continue to allow those costs to be deducted each year.

Otherwise if my above assumption is wrong, then as you stated, amended the 2016 tax return will not change anything. You'll just have to accept the loss unfortunately.

[JenniferS99223]

Thank you!

While awaiting a reply, my thought had been to add the loans/amortization back into the annual deductions for 2021 and going forward (at the normal annual rate) for the remainder of the loans’ lives. Your helpful answer coordinates well with that plan.

The amortization deductions lost for the years in between aren’t enough to worry about for amending returns so I’ll just chalk that nominal loss up to experience.

You clearly understood the situation and provided a perfectly clear answer, and your time and insight are much appreciated! 🙂