I know that loan origination fees on main home can potentially be deducted on sch A, but what about commercial rental real estate? Everything I read doesn't talk about the treatment of commercial, just residential. Any prodding in the right direction would be greatly appreciated.
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See real property section - I would add to basis and depreciate. -
Thanks for the pub reference. That is what I was looking for. The loan origination fees must be capitalized and deducted over the life of the loan. They are part of the settlement costs that can't be added to the basis.
The following items are some settlement fees and closing costs you cannot include in the basis of the property.
Fire insurance premiums.
Rent for occupancy of the property before closing.
Charges for utilities or other services related to occupancy of the property before closing.
Charges connected with getting a loan. The following are examples of these charges.
Points (discount points, loan origination fees).
Mortgage insurance premiums.
Loan assumption fees.
Cost of a credit report.
Fees for an appraisal required by a lender.
Fees for refinancing a mortgage.
If these costs relate to business property, items (1) through (3) are deductible as business expenses. Items (4) and (5) must be capitalized as costs of getting a loan and can be deducted over the period of the loan.Comment
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