John M. Hoffman & Associates CPAs
Frequently Asked Tax Questions
Rental property acquired, sold, or refinanced?
We will need a copy of the HUD 1 settlement statement from the purchase, sale or refinance.
From this settlement statement we identify closing costs that are amortizable over the life of the mortgage. When there is a refinance, the previous unamortized remaining closing costs are taken as a deduction and a new amortization established for the new closing costs.
From the settlement statement we also get adjustments for things like rental income, real estate taxes, water bills and utilities.
If this is a new rental property we will also need help in allocating the cost between depreciable building and non-depreciable land. A copy of an appraisal helps or perhaps a copy of the real estate tax bill if it separates land and building valuations.
