Posted by Been There on March 27, 2005 at 24:08:04:
It would be nice to do this as “expenses”, but my CPA says that I have to call this total the purchase price, and then amortize this cost over a longer period of time unfortunately. Check with your CPA.
Been There
Purchase cost or expense: Reinstatement - Posted by E
Posted by E on March 24, 2005 at 14:40:25:
We purchased a property recently where we reinstated the loan and paid a certain amount to bring the loan current.
My question is; Should this expenditure be counted as part of the purchase price or should it be counted as current year expenses and principal paydown?
The end result will either be
a) a lower purchase price and higher expenses in the year of purchase, or
b) a higher purchase price and higher depreciation expense in the future.
Would your opinion on this hinge upon whether these monies were paid to the seller who, in turn, paid the funds to the lender OR whether the funds were paid directly to the lender from us; the buyers.
By the way, the monies that were paid broke down in to the following categories; late fees, interest, penalties, legal fees, property taxes, property insurance and some towards principal.
Thx