From a Refi closing, what fees can be deducted?

[Jennifer D]

Hi, I have perused the internet, but I can't find an answer
to a question that I have.

I understand that points associated with a refinanced loan
may be amoritized and deducted. Also, it seems that a 'loan
origination fee' may be considered points. Is the idea here
that these are like interest b/c they are a % of the loan?

Are any other loan related fees deductible or may a TP only
adjust his basis?

I would love citations to the Code/Regs or case law if
anyone has them.

Thanks!

Jennifer DeBoer

 

[David Woods, EA, ChFC, CLU]

Hi, I have perused the internet, but I can't find an answer
to a question that I have.

I understand that points associated with a refinanced loan
may be amoritized and deducted. Also, it seems that a 'loan
origination fee' may be considered points. Is the idea here
that these are like interest b/c they are a % of the loan?

No. The idea is that you got a lower interest rate by
essentially prepaying interest.

Are any other loan related fees deductible or may a TP only
adjust his basis?

Loan related fees are neither deductible nor capitalized.
They personal non-deductible expenses.

I would love citations to the Code/Regs or case law if
anyone has them.

I get *PAID* to provide cites.

 

[rick++]

The remainder of points from a previous loan can be deducted
immediately. The new loan points is amortized over 30 years.
Partial interest and partial taxes, usually 0 to 30 days
worth, can be deducted. The interest shold be reported on a
1098, while you have to scan the closing doc for the
property tax.

 

[Arthur Kamlet]

Hi, I have perused the internet, but I can't find an answer
to a question that I have.

The whole internet? :^)

I understand that points associated with a refinanced loan
may be amoritized and deducted. Also, it seems that a 'loan
origination fee' may be considered points. Is the idea here
that these are like interest b/c they are a % of the loan?
yes

Are any other loan related fees deductible or may a TP only
adjust his basis?

The buyer may deduct points he paid or points paid by the
seller. See Form HUD-1, the settlement statement you
received at closing.

Lines 801 and 802 are amortizable by the buyer.

I would love citations to the Code/Regs or case law if
anyone has them.

Check back here in 3 months.

__
Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH

 

[Jennifer D]

I would love citations to the Code/Regs or case law if

I get *PAID* to provide cites.

Jeesh, Dave, chill out. Public internet groups are for
helping others and sharing information. Why are you here
with that kind of attitude?

 

[Maren Purves]

The remainder of points from a previous loan can be deducted
immediately. The new loan points is amortized over 30 years.

doesn't have to be 30 years if the mortgage isn't. I think
the wording is "lifetime of the loan". This is also why you
can deduct the remainder of the amortized points when you
pay off the loan.

Maren

 

[Dick Adams]

I would love citations to the Code/Regs or case law if

Jeesh, Dave, chill out. Public internet groups are for
helping others and sharing information. Why are you here
with that kind of attitude?

I think someone already gave him the cites. We all have pet
peeves and bad days. Maybe the nastiest thing to do is give
him the Section and let him decipher the answer.

Maybe 4-5 years ago I was at a party and someone asked me
about the Foreign Earned Income Credit. The dialogue went:
It's in Section 961.
Where's that?
In the Internal Revenue Code.
Where can I find it?
Try the internet or the public library.
Will they have it?
Absolutely. Excuse me I need to find my wife.

I later learned from another CPA that he was getting paid by
direct-deposit by a German company for post-sales equipment
support and thought that this was foreign earned income!

Moral: Tis better to ask a question than to get a cite!! <G>

 

[David Woods, EA, ChFC, CLU]

I would love citations to the Code/Regs or case law if

Jeesh, Dave, chill out. Public internet groups are for
helping others and sharing information. Why are you here
with that kind of attitude?

There's a difference between offering a helping hand and
doing someone's work for them.

 

[Jennifer D]

Thanks to Rick ++, Arthur, & Maren for your helful comments.

Jennifer DeBoer

 

[Harlan Lunsford]

There's a difference between offering a helping hand and
doing someone's work for them.

Certainly agree with you there, however , probably best
not to even comment on the question.

I'm not here to drum up business (although I DID get two new
clients from here, although I never place any contact
information in my signature).

ChEAr$,
Harlan Lunsford, EA n LA

 

[Shyster1040]

For what it's worth, a complete answer should involve some
sort of citation - since a lot of the real work comes out of
the regulations, a mere Code cite doesn't take all the fun
out of it.

Without a cite, the answer is neither more nor less than
someone's naked assertion (which is only slightly better
than a naked assessment).

With all due respect to the hard-working CPAs here, if you
don't want to play the game, don't show up - bad attitude
spoils it for the rest of us.

 

[Drew Edmundson]

For what it's worth, a complete answer should involve some
sort of citation - since a lot of the real work comes out of
the regulations, a mere Code cite doesn't take all the fun
out of it.

I disagree. I don't think a CPA or an EA is required to
provide a cite on a free newsgroup. For a "complete" answer
a cite may be required but even then I don't think it is
always necessary. e.g. Would you have us cite the Rev.
Proc. each time we give the mileage rate? But people asking
for free advice on a newsgroup aren't entitled to a
"complete" answer. They may want one, they may need one,
but they aren't entitled to anything. Nor do I think the
OP was expecting a cite, she was just hoping for one.

Without a cite, the answer is neither more nor less than
someone's naked assertion (which is only slightly better
than a naked assessment).

I agree. But I would further say that even with a cite the
answer should not be considered correct. The cite is just a
starting point for the person to find/verify the answer
themselves.

With all due respect to the hard-working CPAs here, if you
don't want to play the game, don't show up - bad attitude
spoils it for the rest of us.

Sometimes things said in newsgroups are misinterpreted. I
prefer to read Dave's response as a good natured ribbing of
the OP. That said, if I had replied I would have probably
just ignored the request for a cite.

Perhaps you aren't aware of this but Dick Adams is the
Dictator/King of M.T.M and he makes the rules for this
"game." We play by his rules or we don't play at all.

 

[Dick Adams]

For what it's worth, a complete answer should involve some
sort of citation - since a lot of the real work comes out of
the regulations, a mere Code cite doesn't take all the fun
out of it.

Without a cite, the answer is neither more nor less than
someone's naked assertion (which is only slightly better
than a naked assessment).

With all due respect to the hard-working CPAs here, if you
don't want to play the game, don't show up - bad attitude
spoils it for the rest of us.

First, let me apologize to everyone for allowing that
sarcastic remark to be posted.

Second, as Drew graciously pointed out, I make the rules
here. And I do not recall making any of the rules you have
suggested.

Third, Chapter 26 of the United States Code Service is a
valid cite because if you don't have a copy of the IRC, a
more specific site is useless. If you do have a copy, you
can easily find the cite yourself.

Fourth, if you asked for a cite for when royalties are not
subject to self-employment income, I know it's in Langford
vs. Commissioner. Do I know the case numerology? Hell no.
Do I know whether it's a Tax Court case or an Appellate case?
Again hell no. Can I look it up? Of course I can. Will I?
IT DEPENDS <G>

Finally, I don't like arguments.

Dick

 

[Harlan Lunsford]

For what it's worth, a complete answer should involve some
sort of citation - since a lot of the real work comes out of
the regulations, a mere Code cite doesn't take all the fun
out of it.

Maybe a "complete" answer should, but during tax season
especially, few of us have the time to actually look
anything up just to provide a cite. Hence I shall continue
to give "just the facts, M'am.", i.e. a bare bones answer.

Without a cite, the answer is neither more nor less than
someone's naked assertion (which is only slightly better
than a naked assessment).

With all due respect to the hard-working CPAs here, if you
don't want to play the game, don't show up - bad attitude
spoils it for the rest of us.

Whew; Glad you didn't include us EA's in your comments.
(grin

ChEAr$,
Harlan Lunsford, EA n LA
Thu 10 Feb 2005

 

[David Woods, EA, ChFC, CLU]

For what it's worth, a complete answer should involve some
sort of citation - since a lot of the real work comes out of
the regulations, a mere Code cite doesn't take all the fun
out of it.

Without a cite, the answer is neither more nor less than
someone's naked assertion (which is only slightly better
than a naked assessment).

With all due respect to the hard-working CPAs here, if you
don't want to play the game, don't show up - bad attitude
spoils it for the rest of us.

Then YOU can be the shining example. YOU can post all the
citations you want. The rest of us will provide mere
educated off the cuff responses.

 

[Frederick Jorden]

Shyster1040 wrote:

Maybe a "complete" answer should, but during tax season
especially, few of us have the time to actually look
anything up just to provide a cite. Hence I shall continue
to give "just the facts, M'am.", i.e. a bare bones answer.

Whew; Glad you didn't include us EA's in your comments.
(grin

I thought one was not to look a gift horse in the mouth.
Each respondent to this news group will, within the rules
dictated by our moderator, provide as extensive an answer as
he or she wishes. The extent of the response is
proportionate to the fee paid for the service.

 

[Herb Smith]

rick++ wrote:

doesn't have to be 30 years if the mortgage isn't. I think
the wording is "lifetime of the loan". This is also why you
can deduct the remainder of the amortized points when you
pay off the loan.

This latter point is only true, if you use a DIFFERENT
LENDER for the re-fi. If not, the remaining points from the
previous loan are added to the points from the re-fi, and
amortized over the length of the re-fi loan. I believe you
will find a discussion of this in Pub 936.

 

[Herb Smith]

I would love citations to the Code/Regs or case law if

There's a difference between offering a helping hand and
doing someone's work for them.

I agree with Dave, if they don't like the answers received
on a FREE web site, the poster can get a REFUND on the way
out.

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[Jennifer D]

Then YOU can be the shining example. YOU can post all the
citations you want. The rest of us will provide mere
educated off the cuff responses.

I am the one who posted the original question asking for a
cite.

I agree that without a cite, a statement is just a mere
assertion. I also agree with the person who said that I
"hoped" for a cite, but didn't "expect a cite." I certainly
didn't expect someone to say that "I get paid to provide
this kind of information." If you can't say something nice,
don't say it at all. We are all always students.

If you are a good tax professional, you talk Code. You
don't talk about things in the abstract. I also agree with
the person who suggested the real meat is in the Regs.
Also, if you are a professional, I don't think you feel
threatened by sharing info. There will always be business
for you if you are good.

For your information, I just started a tax business. I have
a JD, but I am not an attorney, yet. One can't know every
area of the Code like its the back of one's hand, but one
can help others. WHY? Because they might help you some
other time. On the ABA Tax group, the members are
constantly talking Code, Rev Procs, Regs, and case law.
Why? Because they are all trying to help each other be the
best they can be. They want to do things right.

I will gain business by the relationships I build. I won't
lose business by helping someone on the Internet who might
live in CA while I live in Ohio.

Just in case there is someone seeking help who lives in N.E.
Ohio email me. I highly doubt that I will get business,
this way, though. I don't expect it. I expect a forum to
talk Code so that we can all be better professionals

Tax Cents LLC
Jennifer DeBoer
New Philadelphia, Ohio

============================================================
Moderator:
There is a significant difference between MTM and the ABA
Tax group. MTM is a professional tax forum driven by
questions from taxpayers. This group was created as an
alternative to misc.taxes (aka The Funny Farm) which is
a haven for tax protesters.
============================================================

 

[Harlan Lunsford]

I thought one was not to look a gift horse in the mouth.
Each respondent to this news group will, within the rules
dictated by our moderator, provide as extensive an answer as
he or she wishes. The extent of the response is
proportionate to the fee paid for the service.

It's been said that you gets what you pays for. Last
night we had free tickets to a concert by Itzhak Perlman and
arriving at the theatre I found it cost a dollar to park
one's car, so I was complaining, sort of half heartedly to
be sure, and wife reminded me what Frederick says above, not
to look a gift horse in the mouth.

Are there any tax advice web sites which charge a fee and
guarantee their cites? I've not seen any.

ChEAr$,
Harlan Lunsford, EA n LA
Sun 13 Feb 2005