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#10
06-09-2004, 05:40 AM
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 Re: Deducting "fees" in the year of purchase. Stuart Bronstein <spamtrap[at]lexregia.com> writes: - quote - > Can't fees be capitalized and added to the
The original issue was loan fees, and they don't add to> basis? If so they are, in effect, deductible when the > property is sold. basis. Phil Marti Topeka, KS << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#9
06-06-2004, 08:23 AM
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| Re: Deducting "fees" in the year of purchase. Arthur Kamlet wrote: - quote - > If you do not elect to deduct points in the year incurred,
You're thinking of a situation where the points were added> how do you amortize points paid on an interest-only loan? to the loan, but weren't "paid" up front (by a "down payment" or whatever) and aren't being paid currently since there are no principal payments? I suspect in that case a cash basis taxpayer wouldn't be allowed to deduct the points until the loan is paid off. And/or maybe you could start amortizing at such time as principal payments begin or a partial payment is made. MTW << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#8
06-06-2004, 07:45 AM
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| Re: Deducting "fees" in the year of purchase. Dave Woods wrote: - quote - > "shagnasty" <shag[at]nospam.com> wrote:
Never say never. Can't fees be capitalized and added to the> > "Dave Woods" <davidwoods[at]verizon.net> wrote: > > > "Chris Wright" <WashoeAssetManagementNO[at]SPAMhotmail.com> wrote: > > > > My wife and I are purchasing a primary residence with a > > > > zero-down interest-only loan. > > > > > > > Am I correct in assuming that, [1] if only interest is paid, > > > > there can be no amortization of "fees" over the life of the > > > > loan as the loan will never terminate; [2] if selling the > > > > property terminates the loan, and the appreciation is less > > > > than $500K, amortization of "fees" over the time we've owned > > > > the property will be worthless to us; and [3] to realize a > > > > tax deduction for paying these "fees" a method (still) > > > > exists whereby they may be deducted in the year of purchase? > > > "Fees" are never deductible on a principal residence > > > regardless of the loan you get. > > Wrong!!! Some fees are deductible; e.g. loan origination > > fees or "points" are deductible fees. > No NOT wrong. If it walks like a duck and quacks like a > duck then it is a duck. Hence if it is a cost based on the > amount of the mortgage, then it is prepaid interest or > POINTS REGARDLESS of the type of name the lender assigns it. > If you walk down the street and ask the guy at the corner > if he had a "Loan origination fee" on his mortgage, he'll > look at you funny. If you ask him if he paid points, you > will actually get a yes or no answer. > My point is, I stand by the answer and that "fees" are never > deductible. basis? If so they are, in effect, deductible when the property is sold. Stu << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#7
06-02-2004, 06:30 PM
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| Re: Deducting "fees" in the year of purchase. Phil Marti <philmarti[at]aol.com> wrote: - quote - > "Chris Wright" <WashoeAssetManagementNO[at]SPAMhotmail.com> writes:
I would actually state this as: Points are amortized over> > My wife and I are purchasing a primary residence with a > > zero-down interest-only loan. > > > Am I correct in assuming that, [1] if only interest is paid, > > there can be no amortization of "fees" over the life of the > > loan as the loan will never terminate; .... > POINTS (a/k/a origination fees) are deductible as interest. > For purchase of your primary residence they're deductible in > full in the year of purchase or may be amortized over the > life of the loan. the life of the loan, but you may be able to elect to deduct in the year incurred any points to buy, build or improve your primary residence. All of which leaves the interesting question I have not seen answered: If you do not elect to deduct points in the year incurred, how do you amortize points paid on an interest-only loan? __ Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#6
06-02-2004, 06:11 PM
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| Re: Deducting "fees" in the year of purchase. "shagnasty" <shag[at]nospam.com> wrote: - quote - > "Dave Woods" <davidwoods[at]verizon.net> wrote:
No NOT wrong. If it walks like a duck and quacks like a> > "Chris Wright" <WashoeAssetManagementNO[at]SPAMhotmail.com> wrote: > > > My wife and I are purchasing a primary residence with a > > > zero-down interest-only loan. > > > > > Am I correct in assuming that, [1] if only interest is paid, > > > there can be no amortization of "fees" over the life of the > > > loan as the loan will never terminate; [2] if selling the > > > property terminates the loan, and the appreciation is less > > > than $500K, amortization of "fees" over the time we've owned > > > the property will be worthless to us; and [3] to realize a > > > tax deduction for paying these "fees" a method (still) > > > exists whereby they may be deducted in the year of purchase? > > > > > If so, which bank and escrow "fees" are deductible and how > > > does one structure payment to guarantee deductibility? > > "Fees" are never deductible on a principal residence > > regardless of the loan you get. > Wrong!!! Some fees are deductible; e.g. loan origination > fees or "points" are deductible fees. duck then it is a duck. Hence if it is a cost based on the amount of the mortgage, then it is prepaid interest or POINTS REGARDLESS of the type of name the lender assigns it. If you walk down the street and ask the guy at the corner if he had a "Loan origination fee" on his mortgage, he'll look at you funny. If you ask him if he paid points, you will actually get a yes or no answer. My point is, I stand by the answer and that "fees" are never deductible. -- David M. Woods, EA, ChFC, CLU Woods Financial Services Boston, MA 02109 << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#5
06-02-2004, 06:11 PM
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| Re: Deducting "fees" in the year of purchase. "Chris Wright" <WashoeAssetManagementNO[at]SPAMhotmail.com> wrote: - quote - > "Dave Woods" wrote:
Maybe I am picking nits here, but usually its pretty obvious> > "Fees" are never deductible on a principal > > residence regardless of the loan you get. > Fees may not be; but "fees" such as a "loan origination > 'fee'" (a.k.a. points), which is in reality INTEREST, > certainly should be deductible! > As I understand the requirements from IRS Pub. 530, as far > as my situation goes, as long as the points are not > financed, they should be deductible in the year paid. the difference between fees and points in acquiring a mortgage/home and when looking at a HUD statement. Perhaps if your original post had simply said "points", you would have received the answer you were looking for. -- David M. Woods, EA, ChFC, CLU Woods Financial Services Boston, MA 02109 << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#4
05-31-2004, 11:18 AM
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| Re: Deducting "fees" in the year of purchase. "Dave Woods" <davidwoods[at]verizon.net> wrote: - quote - > "Chris Wright" <WashoeAssetManagementNO[at]SPAMhotmail.com> wrote:
Wrong!!! Some fees are deductible; e.g. loan origination> > My wife and I are purchasing a primary residence with a > > zero-down interest-only loan. > > > Am I correct in assuming that, [1] if only interest is paid, > > there can be no amortization of "fees" over the life of the > > loan as the loan will never terminate; [2] if selling the > > property terminates the loan, and the appreciation is less > > than $500K, amortization of "fees" over the time we've owned > > the property will be worthless to us; and [3] to realize a > > tax deduction for paying these "fees" a method (still) > > exists whereby they may be deducted in the year of purchase? > > > If so, which bank and escrow "fees" are deductible and how > > does one structure payment to guarantee deductibility? > "Fees" are never deductible on a principal residence > regardless of the loan you get. fees or "points" are deductible fees. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#3
05-31-2004, 10:59 AM
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| Re: Deducting "fees" in the year of purchase. "Chris Wright" <WashoeAssetManagementNO[at]SPAMhotmail.comwrites: - quote - > My wife and I are purchasing a primary residence with a
Fees aren't deductible on a loan for your residence,> zero-down interest-only loan. > Am I correct in assuming that, [1] if only interest is paid, > there can be no amortization of "fees" over the life of the > loan as the loan will never terminate; amortized or not. - quote - > [2] if selling the
See above> property terminates the loan, and the appreciation is less > than $500K, amortization of "fees" over the time we've owned > the property will be worthless to us; - quote - > and [3] to realize a
Go to the blackboard and write "I will not use quotation> tax deduction for paying these "fees" a method (still) > exists whereby they may be deducted in the year of purchase? marks" 100 times. POINTS (a/k/a origination fees) are deductible as interest. For purchase of your primary residence they're deductible in full in the year of purchase or may be amortized over the life of the loan. Points are the only fees that are deductible. All other expenses of getting the loan are a personal expense that never affects your taxes. - quote - > If so, which bank and escrow "fees" are deductible and how
As long as you put enough cash into the process to cover the> does one structure payment to guarantee deductibility? points, you need not do anything else. See IRS Publications 530 and 936. Phil Marti Topeka, KS << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#2
05-31-2004, 10:40 AM
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| Re: Deducting "fees" in the year of purchase. Chris=A0Wright posted: - quote - > My wife and I are purchasing a primary
Most "fees" (i.e., appraisal, notary, deed of trust> residence with a zero-down interest-only loan. > Am I correct in assuming that, [1] if only > interest is paid, there can be no amortization > of "fees" over the life of the loan as the loan > will never terminate; [2] if selling the property > terminates the loan, and the appreciation is > less than $500K, amortization of "fees" over > the time we've owned the property will be > worthless to us; and [3] to realize a tax > deduction for paying these "fees" a method > (still) exists whereby they may be deducted in > the year of purchase? > If so, which bank and escrow "fees" are > deductible and how does one structure > payment to guarantee deductibility? preparation, mortgage insurance premiums and VA funding fees) are not deductible at all. However, "loan origination fees" are deductible in the year the loan is obtained under certain conditions. These fees are often called "Points" and Pub 17 (for 2003 returns) has a good discussion (and chart) of deductibility on pages 166-167. Bill << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#1
05-31-2004, 10:40 AM
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| Re: Deducting "fees" in the year of purchase. "Dave Woods" wrote: - quote - > "Fees" are never deductible on a principal
Fees may not be; but "fees" such as a "loan origination> residence regardless of the loan you get. 'fee'" (a.k.a. points), which is in reality INTEREST, certainly should be deductible! As I understand the requirements from IRS Pub. 530, as far as my situation goes, as long as the points are not financed, they should be deductible in the year paid. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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05-29-2004, 04:02 PM
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| Re: Deducting "fees" in the year of purchase. "Chris Wright" <WashoeAssetManagementNO[at]SPAMhotmail.com> wrote: - quote - > My wife and I are purchasing a primary residence with a
"Fees" are never deductible on a principal residence> zero-down interest-only loan. > Am I correct in assuming that, [1] if only interest is paid, > there can be no amortization of "fees" over the life of the > loan as the loan will never terminate; [2] if selling the > property terminates the loan, and the appreciation is less > than $500K, amortization of "fees" over the time we've owned > the property will be worthless to us; and [3] to realize a > tax deduction for paying these "fees" a method (still) > exists whereby they may be deducted in the year of purchase? > If so, which bank and escrow "fees" are deductible and how > does one structure payment to guarantee deductibility? regardless of the loan you get. -- David M. Woods, EA, ChFC, CLU Woods Financial Services Boston, MA 02109 << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#-1
05-29-2004, 02:12 PM
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| Deducting "fees" in the year of purchase. My wife and I are purchasing a primary residence with a zero-down interest-only loan. Am I correct in assuming that, [1] if only interest is paid, there can be no amortization of "fees" over the life of the loan as the loan will never terminate; [2] if selling the property terminates the loan, and the appreciation is less than $500K, amortization of "fees" over the time we've owned the property will be worthless to us; and [3] to realize a tax deduction for paying these "fees" a method (still) exists whereby they may be deducted in the year of purchase? If so, which bank and escrow "fees" are deductible and how does one structure payment to guarantee deductibility? << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
| Tags |
| deducting, fees, purchase, year |
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