is mortgage principle an expense - Posted by kam

Posted by Jack on April 29, 2004 at 20:59:39:

Kam,

The interest portion of the mortgage payment is an expense, but that could change depending on your intent with the property. If you own a property for income purposes then the interest is considered an expense which you can use to offset against income. However, if you are holding the property for the purpose of selling it in less than a year, then the interest is considered a cost of holding the property and is not expensible until the year in which the property is sold.

The principal is considered a reduction of a liability. This accounting treatment is consistent whether the asset is held for “more than” or “less than” a year.

Calculating gain or loss can be a tricky discussion. If you want more information on that topic send me an email outside of this forum and I will do my best to boil down the answer to something you can handle.

Regards.

Jack

is mortgage principle an expense - Posted by kam

Posted by kam on April 29, 2004 at 16:22:34:

if real estate if owned by a s-corp, then is the full mortgage payment (principal + interest) an expense of the s-corp?

then how is the capital gains tax calculated when property is sold?