Where do I enter mortgage fees for a new rental property. Also, where/how do I enter seller credits

[farooqkassam]

I purchased a new rental property and turbotax does a good job of asking about title fees, recording fees and so on. However, I have no idea on how to enter the following: 

1. Origination fee
2. Underwritting fee
3. Appraisal fee
4. Home inspection
5. Credit report.

 Furthermore, I received seller credits for 

1. closing cost
2. title insurance

Where/how do I enter those in turbotax

[HelenaC · Accepted solution]

Per Publication 527 - IRS.gov Chapter 2, page 7, no, bank origination charges like Points, are not added to the basis.

Enter points in the Assets/Depreciation section of the Review Rental Summary page. You will add it as an asset (Intangibles, Other property). Then it will be amortized over the life of the loan.

Underwriting fees, appraisal fee, home inspection and credit reports are entered as expenses under Professional Fees.

 Settlement fees and other costs. The following settlement fees and closing costs for buying the property are part of your basis in the property and get depreciated. 

• Abstract fees.
• Charges for installing utility services.
• Legal fees.
• Recording fees.
• Surveys.
• Transfer taxes.
• Title insurance.
•  Any amounts the seller owes that you agree to pay, such as back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions.
• Re: Closing Costs and Title Insurance Credits: Credits received by the buyer from the seller get deducted from the basis.

The following are settlement fees and closing costs you cannot include in your basis in the property. 

1. Fire insurance premiums.

2. Rent or other charges relating to occupancy of the property before closing. 

3. Charges connected with getting or refinancing a loan, such as: 

    a. Points (discount points, loan origination fees), 

    b. Mortgage insurance premiums, 

    c. Loan assumption fees, 

    d. Cost of a credit report, and 

    e. Fees for an appraisal required by a lender. 

4.  Also, do not include amounts placed in escrow for the future payment of items such as taxes and insurance. 

Related information:

• Where do I enter income and expenses from a rental property?

[farooqkassam]

Thank you so much Helena! Not only did you respond on how to enter the answer in TT, you also provided backing information from a publication.

[taxes4days]

Agreed- this person is so helpful, I was stressing out over this! Fun times XD

[pixelrogue1]

I am looking for a simple answer to "Part of the basis" phrase above - mainly - WHERE is that information entered. Is this a single field, or a panel (such as Enter Common Expenses) where all the entries get applied to basis. I am 'around' the area (Rental and Royalty Summary) but not locating a field for basis, or any screen w/the word basis that has data entry. (for a rental property)

[DoninGA]

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@pixelrogue1 wrote:

I am looking for a simple answer to "Part of the basis" phrase above - mainly - WHERE is that information entered. Is this a single field, or a panel (such as Enter Common Expenses) where all the entries get applied to basis. I am 'around' the area (Rental and Royalty Summary) but not locating a field for basis, or any screen w/the word basis that has data entry. 

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The cost basis is when you are entering the property as an Asset to be depreciated.  Click on the Learn More link for cost.

[Carl]

Basically, it works like this.

 - Cost associated with the acquisition of the property are added to the cost basis of the property. For example, the title transfer fees you pay to get the property titled in your name at the courthouse where the property transfer is recorded. The TTX program does a pretty descent job of doing this for you, if you work through the program the way it is designed and intended to be used and pay particular attention to the small print on each screen.

 - Cost associated with the acquistion of the loan are amortized (not capitalized) and deducted (not depreciated) over the life of the loan. An example would be loan application fee, mortgage points as well as appraisal fees if the bank required an appraisal before they would consider your loan application. The TTX program does *NOT* separate these cost out for you. To enter those costs associated with the loan select the "Add an Asset" button, select "other" and work it through. When asked for the specific code that applies, its code section 163. When asked for length of time, it's the life of the loan. Commonly 15 years or 30 years.

[pixelrogue1]

perfect. that is what I was looking to confirm. Thank you.

[pixelrogue1]

Thank you for this clarity....🙂