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New Member
posted May 31, 2019 8:01:57 PM

What to deduct when refinancing a primary residence with a room rented out?

I am renting 1/3 of my primary residence (where 2/3 is either my space or shared). I refinanced this property this year. 


What refinance costs am I able to deduct? Am I able to deduct the entire origination cost as I normally would for my primary residence? Additionally, are there any of the other costs (such as appraisal fees) where I may be able to deduct 1/3 of their costs?

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New Member
May 31, 2019 8:01:59 PM

You will be able to deduct different amounts for each item, your primary residence portion and the rental portion. You should enter the deductions for your portion of your primary residence on Schedule A, as an itemized deduction. 

You can deduct more expenses for your rental property than you can for your personal portion of the property. I have listed out the expenses per type and per property that you can deduct and how to calculate it.

Primary Residence

  • Interest - deduct 2/3 of your interest and points paid on your Schedule A, itemized deductions if you are eligible
  • Points paid - Points paid as part of a mortgage refinance usually must be deducted over the life of the loan. If you refinanced to a 15-year mortgage, for example, then you'd deduct a portion of 2/3 of the points each year for 15 years. This is different from points paid when you first bought the home; points on an original purchase can often be deducted in full in the year they're paid. 
  • Costs not deductible - Appraisal fees, Attorney fees, Inspection costs, Legal and recording fees

For more information, please visit this TurboTax Article https://turbotax.intuit.com/tax-tools/tax-tips/Rental-Property/Mortgage-Refinance-Tax-Deductions/INF...

Rental Property

You can deduct not only 1/3 (your rental portion) of the total interest and points paid on a mortgage on rental property, but also 1/3 of all closing costs and fees.

For more information, please visit this TurboTax Article about rental property deductions: https://turbotax.intuit.com/tax-tools/tax-tips/Rental-Property/Rental-Property-Deductions-You-Can-Ta...