Expenses paid to obtain a mortgage. Certain expenses you pay to obtain a mortgage on your rental property cannot be deducted as interest. These expenses, which include mortgage commissions, abstract fees, and recording fees, are capital expenses that are part of your basis in the property.
The term “points” is often used to describe some of the charges paid, or treated as paid, by a borrower to take out a loan or a mortgage. These charges are also called loan origination fees, maximum loan charges, or premium charges. Any of these charges (points) that are solely for the use of money are interest. Because points are prepaid interest, you generally cannot deduct the full amount in the year paid, but must deduct the interest over the term of the loan.
So if these are loan origination costs?
And appraisal fees?
What is correct? My fees are origination fees and appraisal costs?
The loan is for 15 years. So it makes a difference.
Are you coming back? I am still confused. Thank you.
Nevermind, I will go someplace else.
I did request a high detail answer.
Since Pub 527 classified points as prepaid interest, I was going to add it to interest. But then I didn't know what to do with the appraisal fees. Pub 527 specifically states I cannot add appraisal fees to the basis of the property, so I am beginning to think it is not deductable at all.
What you are saying about the points is that I can use the amortization part of Form 4562 so that the points don't get forgotten about in future years?
Can I do it either way? Or should I add the points and the appraisal together and use Form 4562?