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Most closing costs are not deducted as expenses. The following settlement fees and closing costs for buying the property are part of your basis in the property. These are entered in the Assets/Depreciation section of TurboTax. The IRS, Chapter 2, page 7, considers these amortizable intangibles and accounting rules dictate that those are to be depreciated instead of deducted as an expense.
• 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.
The following are settlement fees and closing costs you can’t include in your basis in the property. You can include these as expenses.
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.
Also, don’t include amounts placed in escrow for the future payment of items such as taxes and insurance.
To enter your rental income, expenses and assets, simply follow the directions to enter your rental income and expenses. At some point you'll come across the Rental Summary screen.
- Select Start next to Asset/Depreciation and follow the onscreen instructions. We'll figure out which depreciation method works best in your favor.
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