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Level 3
posted May 9, 2024 9:45:37 AM

How to handle mortgage broker fee and loan fees for rental property we purchased in 2023

This is for a ten year loan.  This is not a refinance.  It is for the initial purchase.  This is what I have done.  Is this correct?

- I expensed the loan fee because it was less than $200

- I amortized the mortgage broker fee over ten years because it was greater than $200

 

Thanks for your assistance and time !

0 1 38863
1 Replies
Employee Tax Expert
May 13, 2024 12:19:21 PM

Yes, you have treated both items correctly.  

 

Loan fees would be expensed as they are not considered part of the capital costs. 

Mortgage broker fees are considered to be part of your basis in the rental property.

 

Please see the following excerpt from this IRS publication for more details.