Failed mortgage on rental property(IRS expenses?)

[David Repinski]

In May of this year I had a failed attempt at securing financing for a mortgage on a rental property. I ended up paying cash and then refinancing two months later. The question is about the cost of the failed mortgage. Can I deduct these costs on Schedule E and what line would I enter these expenses?

[Steven Hamilton II]

David Repinski,

When did it occur? If it was before you closed on the property it must be added to basis. It if was after you closed it would be deducted and listed separately.

-Steven