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Luckyjoshb
Level 1

Refinance Fees on Rental Property

I bought my home in 2009, I refinanced in 2012, and I refinanced again in 2013.

 

In 2019, I moved out and rented my home. I know I can deduct recording fees, legal fees, stamp taxes for rental property, BUT do I add ALL the fees and taxes I paid for the original purchase and refinances? Or do I only calculate the original fees/taxes? Or do I use the last refinance?

4 Replies
BillM223
Employee Tax Expert

Refinance Fees on Rental Property

You report activity on a rental property on Schedule E.

 

You would report on Schedule E ONLY that activity that occurred since the property was "placed in service", i.e., made available for rental (whether or not you had a tenant immediately).

 

Thus fees paid while the house was still your main residence do not apply to Schedule E. Put those fees as appropriate on Schedule A.

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Anonymous
Not applicable

Refinance Fees on Rental Property

recording fees and stamp taxes are treated as a cost of the property.  they are not deductible on refi -ing. 

BillM223
Employee Tax Expert

Refinance Fees on Rental Property

And to be clear, you would enter on your 2019 return ONLY those items that happened in 2019.

 

The issue is whether or not they happened in 2019 before or after your property was "placed in service".

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Carl
Level 15

Refinance Fees on Rental Property

Expenses related to acquisition of the property are added to the cost-basis of the property.

Expenses related to acquisition of the loan are amortized (not capitalized) and deducted (not depreciated) over time.

Your refinancing has nothing to do with property acquisition. So nothing there adds to the cost basis. Additionally, the refinancing occurred while the property was "NOT" classified as rental real estate. So there are no amortizable rental expenses there.  Your only amortizable expenses are those incurred upon the initial acquisition of the original loan when you originally purchased the property.

 

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