info
Google Groups no longer supports new Usenet posts or subscriptions. Historical content remains viewable.
Dismiss
Refinancing: "lender contribution"
21 views
Skip to first unread message
Stan Brown
Oct 1, 2016, 9:45:05 AM10/1/16
to
Sorry for wearying you with yet another question about tax
consequences of refinancing, but I'm very grateful for the answers I
get from this group.
The lender's latest plan, which makes sense given when I plan to
sell, is to offer me an above-market interest rate (though still less
than I'm paying now) and absorb all the closing costs, about $3500,
via a "lender contribution". The closing costs include things like
mortgage tax and title search that involve real outlays by the bank,
as well as fake charges like "processing fee" and "underwriting fee".
As I understand things, there are no income-tax consequences of that
contribution when I take out the mortgage, since the closing costs
would not have been deductible anyway. Is that correct?
And will that lender contribution have any impact on my basis when I
sell the house?
Many thanks!
--
Stan Brown, Oak Road Systems, Tompkins County, New York, USA
http://BrownMath.com/
http://OakRoadSystems.com/
Shikata ga nai...
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
consequences of refinancing, but I'm very grateful for the answers I
get from this group.
The lender's latest plan, which makes sense given when I plan to
sell, is to offer me an above-market interest rate (though still less
than I'm paying now) and absorb all the closing costs, about $3500,
via a "lender contribution". The closing costs include things like
mortgage tax and title search that involve real outlays by the bank,
as well as fake charges like "processing fee" and "underwriting fee".
As I understand things, there are no income-tax consequences of that
contribution when I take out the mortgage, since the closing costs
would not have been deductible anyway. Is that correct?
And will that lender contribution have any impact on my basis when I
sell the house?
Many thanks!
--
Stan Brown, Oak Road Systems, Tompkins County, New York, USA
http://BrownMath.com/
http://OakRoadSystems.com/
Shikata ga nai...
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Arthur Rubin
Oct 3, 2016, 3:11:21 PM10/3/16
to
On Saturday, October 1, 2016 at 6:45:05 AM UTC-7, Stan Brown wrote:
> Sorry for wearying you with yet another question about tax
> consequences of refinancing, but I'm very grateful for the answers I
> get from this group.
>
> The lender's latest plan, which makes sense given when I plan to
> sell, is to offer me an above-market interest rate (though still less
> than I'm paying now) and absorb all the closing costs, about $3500,
> via a "lender contribution". The closing costs include things like
> mortgage tax and title search that involve real outlays by the bank,
> as well as fake charges like "processing fee" and "underwriting fee".
>
> As I understand things, there are no income-tax consequences of that
> contribution when I take out the mortgage, since the closing costs
> would not have been deductible anyway. Is that correct?
>
> And will that lender contribution have any impact on my basis when I
> sell the house?
I'd like to know the answer, myself. One could make a case for Stan's approach (ignore the "lender contribution"), or one could make a case for the "lender contribution" being taxable when actually paid, not just an adjustment to basis. If the lender contribution is considered attached to the new mortgage, it may be taxable; if attached to the later sale, it certainly isn't taxable.
> Sorry for wearying you with yet another question about tax
> consequences of refinancing, but I'm very grateful for the answers I
> get from this group.
>
> The lender's latest plan, which makes sense given when I plan to
> sell, is to offer me an above-market interest rate (though still less
> than I'm paying now) and absorb all the closing costs, about $3500,
> via a "lender contribution". The closing costs include things like
> mortgage tax and title search that involve real outlays by the bank,
> as well as fake charges like "processing fee" and "underwriting fee".
>
> As I understand things, there are no income-tax consequences of that
> contribution when I take out the mortgage, since the closing costs
> would not have been deductible anyway. Is that correct?
>
> And will that lender contribution have any impact on my basis when I
> sell the house?
--
Arthur L. Rubin, CRTP, AFSP
0 new messages