Are Points Deductible On Rental Property. Sometimes these charges are referred to as loan origination fees or premium charges. 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.
The closing costs that are tax deductible on your rental property may include your attorney fees state-required inspection fees other legal fees appraisal fees and even your refinance application fee where applicable. So I have to do Form 4562 to show the property. Although it doesnt seem logical refinance fees and mortgage points are also entered in the AssetsDepreciation section.
In addition to lowering both your interest rate and monthly payments prepaid interest is tax deductible.
To gain the most benefit from the closing cost deduction on rental property be sure to speak with your CPA keep detailed records and receipts and consider using a 1031 exchange to defer paying depreciation recapture and capital gains taxes. Points may also be called loan origination fees maximum loan charges loan discount or discount points. In addition to mortgage interest you can deduct origination fees and points used to purchase or refinance your rental property interest on unsecured loans used for improvements and any credit card interest for purchases related to your rental property. The IRS considers these amortizable intangibles and accounting rules dictate that those are to be depreciated instead of deducted as an expense.
