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What can I deduct when refinancing rental property?

SOLVEDby TurboTax1462Updated December 09, 2023

Unlike your primary residence, where you can only deduct qualified points and interest, you can deduct all costs associated with obtaining a new mortgage for your rental property. Typical loan-related expenses include:

  • Points
  • Loan origination and loan assumption fees
  • Mortgage insurance premiums
  • Application fees
  • Credit report fees
  • Appraisal fees (if required by the lender)

The costs associated with obtaining a mortgage on rental property are amortized (spread out) over the life of the loan. For example, if it cost you $3,000 to refinance your 30-year mortgage, you'd be able to deduct $100 per year for the next 30 years.

Other refinance-related expenses not directly related to the mortgage may also be deductible. Generally, if the cost is associated with operating the property (like real estate taxes or hazard insurance) they're deducted as expenses, whereas costs associated with purchasing the property (like title search fees or recording fees) are added to the property's cost basis, which means they get depreciated.

When you enter your rental property information, we'll ask about all of these things and deduct them according to the rules.

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