topic Where to I input the information if I refinanced a rental property? in Investors & landlords

Where to I input the information if I refinanced a rental property?

philip-sirianni — Sat, 01 Jun 2019 02:54:56 GMT

Do I just add an expense line and enter the information? Are all the closing costs deductible?

Because this is a rental property the closing costs list...

IreneS — Sat, 01 Jun 2019 02:54:57 GMT

Because this is a rental property the closing costs listed on your HUD-1--loan fees, title fees, and recording fees,etc--are capital expenses. You may amortize them over the life of the mortgage.

Turbotax will do all the work. The program will ask if you refinanced your property and then create an asset for your refinancing fees. To enter your refinancing fees, please follow these steps:

Click on the Business tab > Continue > I'll choose what to work on
In the Rental Properties and Royalties section, click the Start/Update button. [See Screenshot #1, below.]
If you have already started adding information about your business, you will be asked if you want to review your rental and royalty information. Click the Yes box.
When you come to the Rental and Royalty Summary screen. Click on the Edit box next to the property. [Screenshot #2]
On the Review Your [address] Rental Summary screen, in the Expenses section, click on Start/Update. [Screenshot #3]
You will come to a screen, Did You Refinance? Mark the Yes radio button and click Continue. [Screenshot #4]
Continue through the screens, entering the requested information.
TurboTax will create an asset, "2016 Refinancing Fees," which you can review in the Assets section of the Rental Summary Screen. [Screenshot #5]

Re: Because this is a rental property the closing costs list...

mjpb52 — Fri, 30 Apr 2021 18:18:15 GMT

Thank You, for many years I have never utilized the step by step method. This year due to a conversion from vacation home to rental + refinanced, I was totally lost. (asset worksheet refinance expenses, etc) Appreciate the clarity and the step by step method to get there. Some people did a screen shot which was totally unreadable and found your answer.

Re: Because this is a rental property the closing costs list...

alex2036 — Thu, 13 May 2021 16:02:39 GMT

Hi, I am working on 2020 Tax, and when I follow your instruction to "Review Your [address] Rental Summary," I only see "Done With Rental Property"

I do NOT see "update"

Is there a bug in your software of year 2020

Re: Because this is a rental property the closing costs list...

AmyC — Thu, 13 May 2021 19:29:18 GMT

You can log into your return and go to your rental property through either the business tab or federal income- depending on your program.

Click edit/update/start to get back into the rental section.
The program will ask if you want to review your property, select yes.
Real estate professional question- answer.
Then your rental summary page, edit.
Scroll down to sale of property/ depreciation, update
Do you want to go directly to your asset summary? select yes, continue
Select the blue button to add an asset, enter your information

@alex2036

Re: Because this is a rental property the closing costs list...

nyoha — Sat, 15 May 2021 06:22:21 GMT

I have the same issue. I thought I was going crazy expecting to have the wizard copy the refinance fees into an asset to be depreciated.

It seems to be a common bug for some of us. I also saw it posted here:

Re: Because this is a rental property the closing costs list...

osimon — Mon, 17 May 2021 05:38:28 GMT

Aha! there is a bug then. I've been going crazy because I added all the refi information and nothing was added to the assets. I went ahead and enter the refi cost as a new asset.

Re: Because this is a rental property the closing costs list...

J__P — Mon, 14 Feb 2022 18:21:51 GMT

I encountered the same problem when filing my 2021 taxes. After entering the mortgage interest paid on my rental property, the software asked if I had refinanced the loan. I entered the requested information from my HUD-1 statement. TurboTax did not automatically create an asset to amortize the expenses. I had to do that manually. This seems to be a problem that's been outstanding for several years. Anyone entering their refinance expanses in the "refinance wizard" without manually creating an asset to amortize may be leaving money on the table.

Re: Where to I input the information if I refinanced a rental property?

lichg97 — Sun, 13 Mar 2022 20:59:45 GMT

Does the "refinance" also include getting the mortgage for a new purchase?

Re: Where to I input the information if I refinanced a rental property?

Vanessa A — Mon, 14 Mar 2022 13:46:15 GMT

What type of new purchase? If you are purchasing a new house with the proceeds from the refinance, then no it does not count. In order for the mortgage interest to be tax deductible, the loan has to be used to buy, build or purchase the home in which it is secured by.

If you are taking out an original loan on a new home, then that would not be refinancing, that would be original mortgage.

Re: Where to I input the information if I refinanced a rental property?

lichg97 — Mon, 14 Mar 2022 13:54:36 GMT

Thanks. So is the fees (points, processing fees/appraisals) associated with obtaining the original mortgage for a rental property deductible (in the amortized way)?

Re: Where to I input the information if I refinanced a rental property?

Cynthiad66 — Mon, 14 Mar 2022 14:14:16 GMT

Yes there are some settlement fees that are includible in the basis of the rental property and can be depreciated.

Settlement fees and closing costs for buying the property become additions to your basis in the property. These include abstract fees, charges for installing utility services, legal fees, recording fees, surveys, transfer taxes, title insurance, and any amounts the seller owes that you agree to pay (back taxes or interest, recording or mortgage fees, charges for improvements or repairs, and sales commissions).

Costs that are basis adjustments can be part of your yearly depreciation deduction for the rental property. Per our Expert RobertG

@lichg97

Re: Where to I input the information if I refinanced a rental property?

lichg97 — Mon, 14 Mar 2022 14:22:21 GMT

Thank you, @Cynthiad66 !

What about the the cost of getting the mortgage, such as discount points, lender processing fees, appraisals, credit report? Some people say they should be deducted in an amortized way for the life of the loan and some says they are not deductible. In TurboTax there is a section to deduct these cost for "refinance" but I am not sure about the original mortgage; it is kind of odd that the cost of "refinance" is deductible but not the cost of obtaining the "original mortgage".

Re: Where to I input the information if I refinanced a rental property?

DianeW777 — Mon, 14 Mar 2022 14:43:03 GMT

These fees are amortized over the life of the loan. Although it doesn't seem logical, refinance fees and mortgage points are also entered in the Assets/Depreciation section. The IRS considers these amortizable intangibles and accounting rules dictate that those are to be depreciated instead of deducted as an expense. The number of months to use if the number of months for the loan repayment.

Because they are a duplication of the fees paid on an original mortgage, this provides a way to expense them similarly, but in a different process (amortization vs depreciation).

What can I deduct when refinancing rental property?

@lichg97

[Edited: 03/14/2022 | 7:42a PST]

Re: Where to I input the information if I refinanced a rental property?

jaiocrothers — Sun, 17 Apr 2022 02:40:20 GMT

How do I enter property assets for rentals? I have an asset that I have placed in service in 2016. I refinanced in 2021. Turbotax automagically imports the asset from year to year. Do I edit the existing asset entry and modify it as sold or do I leave it alone? As far as entering refinance expenses do I enter only closing costs or the entire amount of the loan? Also, if I don't modify or delete the original entry of the asset. Do I remove that asset next tax season?

Re: Where to I input the information if I refinanced a rental property?

PatriciaV — Sun, 17 Apr 2022 20:28:52 GMT

@jaiocrothers

No, if you didn't sell the rental property, you would not change any entries for that Rental Asset.

Instead, report a new loan as a refinance when asked about that under the Mortgage Interest section of Rental Expenses.

Closing costs for a refinance are added to the cost basis for the property. You may report this total as another asset for amortization under Rental Real Estate Assets. Choose Rental Real Estate for the type of asset, then "Amortizable Intangible" on the page titled "Tell Us a Little More." (Mortgage refinance costs are listed in the examples for this type of asset.) The Code section is 163: Loan fees, refinance costs. The amortization period would be the term of the loan (default is 15 years).

Additional Information:

Re: Where to I input the information if I refinanced a rental property?

Jualbers — Wed, 21 Jun 2023 06:24:54 GMT

Hopefully someone is still out there responding to questions.
If I purchased carpeting for rental property several years ago and recently replaced all the flooring, do I removed the Asset created for the carpeting because new flooring has been installed?

Re: Where to I input the information if I refinanced a rental property?

mjpb52 — Wed, 21 Jun 2023 08:46:27 GMT

CARPET: Carpets are typically depreciated over 5 years. This applies, however, only to carpets that are tacked down. If the carpet is glued down (perhaps in a basement) then it becomes “attached” to the property and must be depreciated over 27.5 years. From Web;

Issue is as long as you are beyond the depreciated years than you don't have to recapture.

Re: Where to I input the information if I refinanced a rental property?

Critter-3 — Wed, 21 Jun 2023 13:43:33 GMT

do I removed the Asset created for the carpeting because new flooring has been installed? Yes ... all assets that are disposed of need to be removed from the asset lists ... if it was simply trashed then the selling price is zero.

Re: Where to I input the information if I refinanced a rental property?

Jualbers — Wed, 21 Jun 2023 14:56:05 GMT

We installed LVP flooring. Same applies?