Only loan interest and real estate taxes are deductible closing costs for a rental property. Other settlement fees and closing costs for buying the property become additions to your basis in the property.

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.

How much should refinance origination fees be?

How Much Are Loan Origination Fees? Typically, a loan origination fee is charged as a percentage of the loan amount. Furthermore, it’s usually anywhere between 0.5% – 1% of the loan amount plus mortgage points associated with your interest rate.

What is the origination fee on a mortgage?

A loan origination fee is not a single fee, but actually a set of lender-specific fees that are part of your costs when closing a mortgage loan. Let’s take a closer look.

Where do I deduct points and loan origination fees for rental property purchase?

June 1, 2019 3:12 PM Where do I deduct points and loan origination fees for rental property purchase? The costs associated with obtaining a mortgage on rental property are amortized (spread out) over the life of the loan.

Do you have to expense loan origination costs?

While not technically loan origination costs, they can essentially be treated as such since the treatment of a discount or premium is similar. Since the purchase is not an origination, any internal costs should be expensed as incurred.

What can I deduct when refinancing a rental property?

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. Typical loan-related expenses include: Points. Loan origination and loan assumption fees.