Loan Costs need to be Amortized


T

Tax Tip

You can maximize your tax savings by deducting all of your loan costs.
Loan costs do not add value to your property (like title charges), and
must be amortized over the life of your loan (and not depreciated with
the property basis.)

Find your amortization deduction by adding all the loan costs from
your property's settlement statement and dividing by the loan term (30
years, etc...). The yearly amortization deduction gets reported on IRS
form 4562 for the life of the loan.

If you refinance the property, you will get to deduct all the
remaining loan costs that year, after which you will have a new
amortization schedule for your new loan.

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