How should interest prepayments (including points)for income-producing real estate be handled for tax purposes?
A)They should be expensed over the first year
B)They should be amortized over a period of no less than 60 months
C)They should be amortized over the life of the loan
D)They should be capitalized and deducted once the loan is paid off

Question

Quizplus · Accepted Answer

Interest prepayments for income-producing real estate should be amortized over the life of the loan, as it is a long-term investment. This means that the expense should be spread out over the entire duration of the loan, and not just expensed or deducted immediately. This allows for a more accurate reflection of the income and expenses over the life of the investment.

How Should Interest Prepayments (Including Points)for Income-Producing Real Estate Be