Amortisation of Loan Origination Cost

[STEPHAN]

What is the name of your state? FL

I saw my accountant setting the amortization of Loan Origination Fees to 15 years.

It was for a 10-year loan, so I believe the amortization should be 10 years. It is a CMBS loan that can not be extended.

Does anybody know?

 

[Zigner]

Did you ask your accountant?

 

[Taxing Matters]

What is the name of your state? FL

I saw my accountant setting the amortization of Loan Origination Fees to 15 years.

It was for a 10-year loan, so I believe the amortization should be 10 years. It is a CMBS loan that can not be extended.

Does anybody know?

If you are asking about taking the federal mortgage interest deduction for points/loan origination fees on your principal residence then generally the points are deducted ratably over the life of the loan. In some situations you may deduct them in full in the year paid. See IRS Publication 936 starting at the bottom of page 5.

If you are asking about something else, you'll need to explain the purpose for the amortization.

 

[STEPHAN]

It is a rental property. I got a 10-year loan. Pretty high loan origination fee. Accountant amortized it over 15 years. I believe it should have been 10 years.

Yes, I sometimes disagree. Sometimes I right, sometimes I am wrong.

 

[Taxing Matters]

It is a rental property. I got a 10-year loan. Pretty high loan origination fee. Accountant amortized it over 15 years. I believe it should have been 10 years.

Again, if you are asking about deductions of the points for federal income tax you'd deduct them ratably over the life of the loan unless you meet all the requirements to deduct them in the year paid as described in IRS publication 936. If the amortization is for some other purpose then some other rule might apply.

Have you asked the accountant why he chose 15 years? He may have misunderstood how long the loan period was.