Can income property closing costs be deducted in the year paid?

Or must the closing costs for income property be amortizied over the life of the loan?

3 Answers

  • Russ B
    Lv 6
    1 decade ago
    Favorite Answer

    If by property you mean real property (real estate). It would depend what the closing cost included, parts of the closing cost might be deductible. But the entire closing cost is not..

    Again, depending on what type of property you are talking about it might be amortized or it might be depreciated (they aren't the same thing).

    Regardless of the method (amortization or depreciation) it has nothing to do with the life of a loan. What determines the time frame is what type of property.

    Hope this helps.

    Edit: What Wayne Z is referring to as closing costs on a loan might be called points (they are if they are amortized according to the loan length). And, even that isn't always true.

    I made an assumption that you were talking about actual closing cost in the purchase of a property...i.e. insurance, property tax...etc..

    Source(s): Tax Professional for 19+ years.
  • 1 decade ago

    Closing costs related to the property are added to the basis of the property and depreciated along with the property.

    Closing costs related to the loan (if any) are amortized over the life of the loan.

    None are deductible in the year of closing.

  • Anonymous
    1 decade ago

    Closing costs are generally added to your cost basis and become part of your depreciation expense.

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