"2nd question. If I refinance in 2 years. I will be able to write off on Schedule E.
Only remainder balance on points. $5625.00?
Unused fee I subtract from Schedule E. Line ? Other Expenses – Deductable points."
If you refinance in the second year and pay off all of that loan then you will take the balance of the points on the same line 12 or 13 same as before as interest in that year.
With first year deduction of 169 the rest 5456(5625 -169)would be taken as an interest expense.
"I may depreciate $5105.00 over 25 years of the loan. As well?
I bought property 4/1/2013.
IN total I will depreciate $10730 over 25 years? Yes
Or only points. What do I do with remainder expense?"
No this is not what is depreciated.
The points are interest expense each year as explained.
The rest of the closing costs depends on what it is for which is why I gave the link that has a list line by line. Some are not used, some are current expense and the rest are added to the purchase price as part of the cost of the property.
Reserves might be part of that 5105 and are not a deduction and are not added to the cost of the property. The reserves, such as for insurance or property taxes are just set aside amounts that will be part of the expense that you do deduct for insurance or taxes, so those amounts of closing costs are not used at all. Instead you will list the total paid for the year as insurance or tax (and that will include the reserves)
Any other deductible items that were paid in closing can be claimed in the year of purchase. For example, from the linked article:
"Adjustments for items paid by seller in advance
106. City/town taxes – These are allowed as a current rental deduction but must be reduced by any amount on Line 210
107. County taxes – These are allowed as a current rental deduction but must be reduced by any amount on Line 211
– These are allowed as a current rental deduction but must be reduced by any amount on Line 212. However, if the assessments are specifically labeled as local
improvement district (LID) assessments, they are not currently deductible and must be amortized over the life of the loan.
Adjustments for items unpaid by seller
210. City/town taxes
211. County taxes
These amounts reduce any deductible amounts on lines 106, 107 and 108 above."
So, no there is not usually the total of closing costs that is added to the purchase price that is depreciated.
After the reserves and current deductible amounts, such as property tax, then the rest of the costs of closing (credit report, appraisal fee, floor certificate, Tax Insurance, Lenders title, etc) are added to the cost that can be used for depreciation.
The purchase price plus the closing costs not deducted (such as points, property and reserves) less the cost of the land, if any, is the basis for depreciation of the property.
Hopefully that answers your new questions.
But again,please ask if you need more discussion or clarification.