I refinanced my rental. What to do with the refi expenses from the previous refi?

[ghettodawg]

Hello turbotax community,

I refinanced my rental property in 2019, and Turbo Tax created a "Refinancing fees" asset that amortizes in 30 years. That's fine.

But I have a previous similar "asset", from a previous refinancing that I did few years ago. What should I do with it? Continue amortizing it for the remaining 25 (out of 30 total) years? Or "dispose" the asset, since I no-longer have it? That mortgage was fully paid off by the new one.

Thank you!

your ghettodawg

[Critter]

The old mortgage was retired due to refinancing so the old refi fees where also retired ... so in the amortizing section when the new fees are added the old ones are "disposed" of. 

[Carl]

It depends.

If you refinanced with the same lender, then the remaining amortized costs not yet deducted on the old mortgage are added to the amortized cost of the new mortgage and amortization  starts anew over the life of the new loan.

If you refinanced with a different lender then the remaining amortized costs on the old loan are fully deductible. Then amortized costs on the new loan are entered as such and deducted over the life of the new loan.

[Louie G]

How do we dispose of the worksheet for the older refi ?

new loan with same lender - Rental Property

[Carl]

After adding the remaining amortized cost to the new asset which you entered in the assets/depreciation section, simply delete the old (original entry) from the assets/depreciation list.

[Louie G]

What I tried was to put the refi date as the Date Sold - Line 20 under Dispositions.

The system gave an allocated amount of Amortization for the year, and the Asset Life History shows that there will be no more amortization after this year, and there is a "S" in the Depreciation Report, Code Column.

I then took the balance not amortized and the new refi amounts and created a new asset page.

Looks correct...

[User ID 912021]

If I refinanced with a new lender, where do I deduct the amortization costs from the old loan? Thank you.

[MarilynG1]

@User ID 912021 If you refinanced with a new lender, you can continue to amortize the remaining amount of amortization costs from the old loan.

From @Carl above:

"If you refinanced with a different lender then the remaining amortized costs on the old loan are fully deductible. Then amortized costs on the new loan are entered as such and deducted over the life of the new loan."

When you Edit your Asset for the old amortization costs and indicate 'Sold' (date of refinance) for $0, the remaining balance will be added to Expenses on Schedule E. 

Click this link for more details on Prior Amortization Costs.