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I have a rental property that was purchased in 2001 and basis was established effective 9/2001. The basis amount included the purchase price plus all related expenses that need to be xtended out for the life of the asset (ex: points, etc.).

Simple.

Now, in 2002 I have refinanced that property and having a difficult time correctly accounting for the change.

There are expense asociated with the refinance that are exactly the same as with the original purchase, but no points paid this time.

I really confused on how to make the changes. Do I accelerate the 2001 expenses and reduce my basis, then increase my basis by the new expenses, or do I establish a new basis amount just for the 2002 expenses and then accelerate the 2001 expenses.

arrggg...

any help?

clear enough?

cat
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