investment property refinance and deduction?

[ntz69831]

Looking into refinancing investment property, i am being asked to pay closing cost and fee since its investment property 

are closing cost and fees deductible ?

[VictoriaD75 · Accepted solution]

No. However, some of these expenses may be used to adjust the basis of the property to determine gain in the year of sale. Any interest, points (pre-paid interest) or taxes paid at closing are deductible as itemized deductions.

Sales expenses that can be included in the basis of the property:

 - commissions

 - appraisal fees

 - broker's fees

 - legal fees

 - advertising fees

 - home inspection reports

 - title insurance

 - transfer taxes or fees

 - geological surveys

 - loan charges (points) or other fees paid on the buyer's behalf

Sales expenses do not include:

 - mortgage payoffs or interest

 - home equity loan payoffs

 - rent-back costs

 - payoff to creditors

 - property taxes

 - home owner association fees

[Carl]

If this is rental property, the below applies.

 - Cost related to acquisition of the property are added to the cost basis of the property and depreciated over time. This is not common on a refinance.

 - Cost related to acquisition of the loan are amortized (not capitalized) and deducted (not depreciated) over the life of the loan.

[ntz69831]

let me see if i can go through turbo tax for business to understand this