If I amoritize the points off my condo on Schedule A, do I have to continue to amortize on future taxes?

Question

I had professional do my taxes for the past 4 years and they amortized points on schedule A. However, I want to do my own taxes this year and have no idea how they figured out the amortization. I read somewhere that you can amortize all the points on the year that you sell. But, since I started amortize it yearly, do I have to continue to amortize yearly, or can I wait to amortize the remaining balance when I sell?

Answer 1

You are amortizing the points over the life of the loan. If you have had the condo all year and had it for several years, simply look at the old returns--the amount should match on your 2006 and 2005 returns (12 months each)--just use the same amount if you lived in it all year.

When you sell, the remaining points that haven't been amortized can be claimed. And no, you can't just wait until you sell, amortization goes on whether you use it or not.

Answer 2

The points and fees, as one of the members of this forum inidcated you amortize the points and fees over the life of the loan.

Now, the way you arrrive at this is you take the points and fees add them together and divide them by the terms of the loan. Say your loan was 30 years and your points and fees combined amount to $5,500 so you would divide $5,500 by 30 years which would give you a total of approximately $183.33 per tax year.

Now if you refinance or sell the property, what ever you have not deducted over this 30 year period you may now deduct the remainder. In this case if you had deducted your $183.33 for 4 years, you would have deducted a total of $732.00.

Now with the refinance or selling of your property you may now deduct the remainder $4,768 in the year you refinance or sell the property.

You have to deduct this eacch year, it is not accumulative for a one time deduction.

Now saying all that you should always check with your tax consultant for any tax advice.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 3

We it a purchase or a refin?