Where to deduct the prepayment penalty from a refi...
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
User ID 912021
Level 2

Where to deduct the prepayment penalty from a refinance on a rental property?

Hello:

I refinanced an existing loan with a new lender and paid a large prepayment penalty to the previous lender.


The prepayment penalty was not included with any of the amounts on my 1098 from the previous lender.

On what line of my Schedule E should I deduct that prepayment penalty? 


Thank you

2 Replies
ErnieS0
Employee Tax Expert

Where to deduct the prepayment penalty from a refinance on a rental property?

It depends. If you paid the entire penalty up front, you can deduct the entire amount as a 2020 rental expense. Otherwise spread the amount over the life of the loan.

 

If you deduct the entire amount, enter it has mortgage interest. You do not need a 1098 to enter mortgage interest from a rental.

 

If you are amortizing the prepayment penalty, enter the amount in Assets/ Depreciation as Intangibles, Other property.

User ID 912021
Level 2

Where to deduct the prepayment penalty from a refinance on a rental property?

Thank you for a clear and useful answer.

Dynamic AdsDynamic Ads
v
Privacy Settings