All Forum Posts by: Dana Powell

 @Jason Wray and @Rick Albert, a friend of mine would like to use a DSCR loan to purchase her mother-in-law's house as an investment property. The MIL has owned the property for 4 years and there is no mortgage (purchased in cash by her grandson; I raise this to you in case there are capital gains implications for MIL and DIL when the latter sells). Is the DIL considered to be "direct family," and if so, could the MIL gift her enough money for the down payment and closing costs? If it makes a difference, the DIL could purchase in her name or in her construction company's LLC name. TIA!

@Jason Wray, @Michael Plaks, @Basit Siddiqi, and @Sean O'Keefe,

Linked here as well as written below is the IRS rule I referenced in my original post re limiting deducting points to loans that are 30-year or less.  My loan is a 40-year loan with the first 10 years as interest only and then the loan adjusts to a P&I 30-year mortgage at the same rate as the first 10 years.  What do you think?

If you don't meet the tests listed under Deduction Allowed in Year Paid, or later, the loan isn't a home improvement loan....you can deduct the points ratably (equally) over the life of the loan if you meet all of the following tests.

1. You use the cash method of accounting. 
2. Your loan is secured by a home. (The home doesn't need to be your main home.)
3. Your loan period isn't more than 30 years [Emphasis mine]
4. If your loan period is more than 10 years, the terms of your loan are the same as other loans offered in your area for the same or longer period.
5. Either your loan amount is $250,000 or less, or the number of points isn't more than:
   1. 4, if your loan period is 15 years or less; or
   2. 6, if your loan period is more than 15 years.

Thanks @Michael Plaks!  I'm fairly confident from my review of IRS website about what goes where.  I wasn't aware of the difference @Jason Wray alluded to as to how ownership type affects tax treatment of closing costs.   Unless @Jason Wray was referring to the tax flexibility of an LLC to be considered as a sole proprietorship or corporation. In which case, I do understand the difference and have elected to be considered a sole proprietorship for tax purposes.

Thanks @Jason Wray  for such a quick response!  One last question:  I did purchase as an llc with personal guarantee; how does that affect the write-offs?

Greetings, when researching online, i came across a nugget that typically deductible closing costs can only be deductible on mortgages that are 30 years or less, but I can no longer find that web page!  If there is such a rule, does it pertain to rental property or just to primary home mortgages?

Secondly, since DSCR loans are considered business loans and not conventional loans, can closing costs that are typically deductible for conventional loans be deducted for DSCR loans?

In addition, am I correct in assuming that, regardless of whether a loan is DSCR or conventional, an investor can add the closing costs that are typically added to the cost-basis of a rental property? Thanks in advance!

I dont How I've missed that before. I'm almost convinced that that black banner doesn't always show up, LOL. anyway thank you very much @Michael S. 

I only happen to see the search icon when I Google a topic and click on the bigger pockets Results from the search.

@Lisa W., It's been 4.5 years--how has the Coretec Plus held up?  Does it have the WPC core?

Thanks @Russell Brazil for taking the time to respond.  My question states when the product itself is at fault--not poor installation--why should I be expected to pay to rip it out and have re-installed?  The warranty itself says that if installation was determined to be the cause of the fail, that the manufacturer will not honor the warranty.  But I no longer need an answer to the warranty portion of my question.  I checked other warranties and replacement/refund cost of product only seems to be the standard.  LL actually goes further in the opposite direction:  it only offers a store credit, lol.

A small local floor retailer says FloorsPlus product, $4/sq ft is his store's high seller to DC condo owners.  He only sells the product with 
20 MIL wear layer.  He installs for about $2.60/sq ft.  The warranty (link below) only applies to refunding or replacing the product; is that typical?  If a payout of a claim is deemed necessary because of an inferior product, it seems unfair that I as the buyer would have to bear the cost of ripping out the inferior product and the cost of re-installation.  Another concern is that the distributer was only established in 2020.  Should I be concerned that product made in China by a company specializing in laminate wall panels?  Should I go with a more tried and true brand like LifeProof?    TIA for your guidance!

https://www.shopfloorsplus.com... (warranty)

https://www.shopfloorsplus.com... (specs)