Amortized refinance costs on sale of rental

[appelman]

The season hasn't started yet. and already my brain doesn't seem to be working. When rental real estate is sold (or foreclosed on), what happens to remaining balance of refinancing costs that were being amortized? Are they released as a current expense, added to basis, or neither?

[ChEAr$]

The season hasn't started yet. and already my brain doesn't seem to be working. When rental real estate is sold (or foreclosed on), what happens to remaining balance of refinancing costs that were being amortized? Are they released as a current expense, added to basis, or neither?

had such a case once upon a time, and since this type of expense is not relative to basis of the property, it follows that it must be current expense.
And that's the way I did it.

[PIGLEE]

On a personal residence you can deduct the balance in the year of the sale (or year of the refinance). I have not looked but I think it would be the same for a Rental.

[appelman]

That was sort of my thought.

For some reason, my software doesn't want to do it. It frees up the passive losses, but not the remaining amortizable balance.

[taxxcpa]

Amortizable expense

For some reason, my software doesn't want to do it. It frees up the passive losses, but not the remaining amortizable balance.

I would enter the amortization as an expense on the Schedule E.

[ChEAr$]

For some reason, my software doesn't want to do it. It frees up the passive losses, but not the remaining amortizable balance.

That's a good reason to use the "override" key. (grin

[Gretel]

Which is true but I always get doubts in what I believe to be true when the software doesn't want to cooperate or does something unexpected. Most of the time the software is right.

[taxxcpa]

Usually right

Which is true but I always get doubts in what I believe to be true when the software doesn't want to cooperate or does something unexpected. Most of the time the software is right.

Sometimes the software requires something like checking a box or entering data in a somewhat different method than you anticipate.
I found this in getting my software (Drake) to calculate maximum SEP contribution and also in creating Form 4797 for an installment sale of a rent house. By entering it just right, the program got the correct results but initially I had entered in what I thought was a more straightforward way.