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Tax Law (Questions About Taxes)/Tax in accrued interest at refinance


I am holding a 1st and 2nd mortgage that are in default.  I have agreed with the borrower to roll the combined balance including accrued interest and late fees into a modified or new mortgage at a lower interest for a longer term.  The original notes were on investment property but now the borrower has moved into the house so it will be occupied by the borrower at least for the near term.  Will I need to report all of the accrued interest as income in the year of the refinance even though it has not been received?  What is the accounting transaction?  Is there more than one way to structure this?  Thanks, Jim.

if you don't change the balance(s) due, there is no real tax effect. unless you report on the accrual basis for a business investment (are the loans held by you personally or by a business you control?).  if you are cash based, you don't pick up the accrued interest as income.  (whew!)

you will file new notes and amendments to the notes at town hall?

do you need a full time cpa for all your tax questions?


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Tax and general business including hospitality related (hotel mgmt degree and experience in industry prior to obtaining ms tax and cpa).


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