Credit Card Interest for Rental Property Owner

[Gretel]

I have a unique situation in that a t/p opened a new credit card account just for fixing up a house to sell it. No other purchases on this credit card. I am inclined to allow the interest along with the actual expenses as additional basis once the house sells.

Anyone has objections to this?

[S T]

Hi Gretel,
Yes I have done it on occasion - as long as I know that those purchases are for the "Rental" and then deducted the interest on the Sched E.

I do the same with a Sched C.

Sandy

[Gretel]

Thanks, Sandy. It helps getting confirmation from someone known to be very diligent. I did not have any doubts on Sch. C, if separate credit card, but wasn't sure on Sch. E.

[oceanlovin'ea]

I would agree. If the credit card was used only for the rental properties, then the interest charged on the card would be deductible.

Linda, EA

[ToledoEd]

The interest would be an easily traced expense to the house. I would agree with your adding the interest to the basis of this flip house.