Where do i put closing costs of a re fi on a rental

[sutherlandbb]

We re-fied our rental last year.  We had some closing cost expenses,,and they deducted several months of taxes,.and other closing costs from our cash out..

Do I add the cash out dollars to our income?

And where do I apply the extra taxes, and insurance they deducted?

[RichardK · Accepted solution]

The taxes you can deduct when paid, the cash you receive is a loan so it is NOT taxable, the other refinancing costs are handled as follows:

The refinance fees will be amortized over the life of the loan. They should be entered in the Depreciation section. The property type will be Other, Then Other asset type. Use the date the loan closed for the acquisition date, and the amount of the fees is the amount you paid. There is no land value in this. 

Use asset type Z, then spread the deduction over several years. It is not listed property. You will use Amortization as your Depreciation type. Then choose either Residential or Non-Residential real estate. The recovery period and AMT recovery period will be the life of the loan. The depreciation will be Straight line. 

Then you will need to go to Forms mode to correct what the interview will not do. It he box for Code section (it should be pink), enter 167. Then scroll down to the next pink boxes and delete the entries there. Go back to Step-by-Step and you will receive the proper deduction.