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I think you have the basic gist of how it works when you purchase a rental property. All of the costs that are incurred prior to the asset being placed into service are rolled into the basis of the property...so, anything pre- September 1 is basis, anything after that is expense
So the quarter taxes, plus 2 months of the next quarters taxes, are included in the basis of the property
The interest on your home equity loan is rolled into basis from April through end of August, as is the interest on your credit card and the transaction fee you incurred
Any interest incurred after 9/1 is expensed on schedule E
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Processing fee $1200.00 I incurred on VISA. Besides Monthly interest. I add to BASIS. Not Depreciate. Who lump sum.
Rental leases on this property begin 9/1/2013.
Visa Interest 1.99 % on $40,000, I subtract on Schedule E. Under line 12 or is line 13 other interest. Do I have to attach sheet other explain other interest.
You add the processing fee to your basis, and your credit card interest would be line 13. You can put "visa" on the line, and if you have more than one source of other interest, attach a schedule showing where the interest was paid.
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I own 3 more properties. Had number of closing.
In the past. I would not depreciate points. I simple added them to basis.
Rolled 7-8 closing fees points into closing. Less Taxes and Insurance.
Is this a big problem.
Fixing expenses: windows, doors, kitchens, granites, toilets, I would add to basis.
Example additional $10,000 a year. For last 5 years. Major renovation.
Is this a big problem. I will be listing this property to sell 2014.
Could you specify exactly. What fixed cost I need to capitalize.
Example roof, I understand.
Doors, toilets, kitchen sink, kitchen cabinets, light fixtures.
Please give me a year table is in 5, 7, or 10 years. Depreciation. Confused.
Last question promise. Rental property.
I paid off mortgage on a building. It was a small mortgage. For 10 years I Deducted mortgage interest. At the end of 10 years. Paid off the mortgage.
Few years later. Needed money refinance the house again?
Can I deduct mortgage interest? Depreciate Points Basis, etc.
Have I made a mistake, I deducted mortgage interest for the 2nd time.
Plus added points to basis. Was that wrong? This is investment property. Money was used to renovate the building. Money was spend on construction.
Example I refinance took cash out example 100,00k
$40,000 used towards building improvements.
$60,000 used as downpayment for another property. Property B.
I can deduct interest on $40,000 only?? For property A.
In the past I deducted interest on all $100,000 against property A. Income. on
Was it a mistake?
My CPA, friend tells me I can’t deduct interest once I paid off the loan.
If I refinance again for the 2nd time, can’t deduct mortgage interest on schedule E.
I am confused. You are telling it’s o.k.
I refinance took out $100,000.
$40,000 used for construction of the building. That $40,000 for construction I can deduct.
If I used any amount for purchase of car or personal items. Obviously, I can’t deduct
that mortgage interest.
For the past 15 years. I renovated this rental property extensively.
I need to keep each receipt. My contractor has to sign off on all their work?
Impossible I had so many little job, ETC..
I am nervous, because I will be listing property for SALE.
Afraid of audit. I will incur gain.
Meaning my original loan $160,000 I paid off .
If I refinance the same property take cash out $200,000.
I can deduct interest on only $160,000? and all funds need to be spend on
renovation of the property?
Not personal USE.
I can deduct interest on $200,000 greater than original loan.
Since funds were used for improvement of the building.
I can’t use any of the funds for personal use?
Last and final question.
I can deduct unused points $ on schedule E. Line 13?
Other interest. Where do I write off Undeprecitaed points $.
Original points $5600.00
10 Year into loan I refinance. Incurred other point fee example $4500.00
New points I will depreciate. Old points fee deduct on Schedule E. Line 13 or where.
Or make an addendum. Please be specific.