I refinanced my rental property in <1 year of purchasing it. How do i deduct my original mortgage costs entirely in this year?

[DIYTtax4years]

No, I'm talking about the refinance fees of 2019.  lol.  Yes, they would be knocking at my door now if it were. lol

[Carl]

It was your use of the word "depreciation" that threw me off. Your financing fees are not capitalized and depreciated. They're amortized and deducted.

At this point, you're only talking about one tax year (2019) on the financing fees for the old loan. Just leave it alone and work it through using the guidance I provided earlier, so you can go ahead and deduct the rest of them on your 2020 return.

[DIYTtax4years]

Thanks so much! What great help,  you and everyone are all in here. 

[amread]

@Carl - thanks for helpful responses. I refinanced my rental with the same lender as my original lender, however, my original loan was transferred to a different company immediately after closing. Can I count my refi lender as a "new lender" since they weren't my current lender at the time of the refi?

[Carl]

Can I count my refi lender as a "new lender" since they weren't my current lender at the time of the refi?

No. Unfortunately, it just doesn't work that way. I wish it did though.

[amread]

Bummer! Thanks for the quick response!

[Gladster]

Under this scenario, when the points transfer to Misc Expenses, they transfer at 100%, and NOT at the rental use percentage. 

Further explanation:

If the origination points at the time the mortgage was taken out stood at $10,000 and you used the property 75% rental and 25% personal, then the program correctly depreciates the points at 75% every year, BUT then when you do a refi (and at this point of time let's say the depreciated points stand at $9,000), then following the steps you outlined, the FULL $9,000 gets transferred to Misc Expenses (in Sch E). Shouldn't just 75% of $9,000 go to Misc Expenses (and the balance 25% of $9,000 go to Sch A)?