All Forum Posts by: Arthur Schwartz

A mortgage reinstatement is where person X cannot pay any mortgage payments so their mortgage goes into foreclosure. Person Y comes along and either a) pays the entire outstanding loan balance of hypothetically $153,246 or b) does a mortgage reinstatement in which only the accrued mortgage payments which have not been made, (from when person X stopped paying until today) of hypothetically $37,296 are made and person Y agrees to pay future mortgage payments as they come due.

In this example, the future payments are roughly $153K minus $37K or $116K. My question was, if Person Y pays the accrued $37K (the payments needed to bring the mortgage current) is any portion of that tax deductible? Thank you!

I may be reinstating a mortgage which fell into foreclosure, and using the property as rental real estate. Is the cost of reinstatement, tax deductible, on the basis that it is the cost of acquiring the investment property?  Or is the cost of reinstatement simply part of my basis and this reduces any capital gain or loss at time of sale; in which it would be similar to a down payment on a mortgage? (I have not yet done my first deal).  

thank you to everyone who responded.  I especially appreciate frank chin's illustration.  this cleared up the issue well.  thank you all!

Hello!  I want to pose a hypothetical example.  If I buy a rental property for 200K where land is valued at 50K and building at 150K. then i can depreciate the building at about 3.6% annually or $5455 in dollars.  Lets say the building increases in value to 300K and I do a refi.  Lets say the building is now appraised at 240K, land at 60K.  Does the depreciation start fresh on the 240K or now $8727 annually?  Or does it stay at $5455 until the building is sold?  (I am new and have not done any deals).