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Posted by Mike C on April 30, 2008, 5:34 pm
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I am thinking of buying 2-4 flat that i would live in. Now I receive a
substantial itemized deduction for my interest and property taxes on
my single family home (which would be sold to buy the rental
property). My concern is that I will have to apportion the property
taxes and interest between the business (rental property) and my
personal deductions, rendering them useless because they will be below
the standard deduction.
My question is, is there any way around this? For example, using a
partnership or corp to buy the property and then paying fair market
rent to it for my unit. At least then the deduction would be had by
the rental rather than lost.
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Posted by removeps-groups@yahoo.com on April 30, 2008, 9:12 pm
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> I am thinking of buying 2-4 flat that i would live in. Now I receive a
> substantial itemized deduction for my interest and property taxes on
> my single family home (which would be sold to buy the rental
> property). My concern is that I will have to apportion the property
> taxes and interest between the business (rental property) and my
> personal deductions, rendering them useless because they will be below
> the standard deduction.
>
> My question is, is there any way around this? For example, using a
> partnership or corp to buy the property and then paying fair market
> rent to it for my unit. At least then the deduction would be had by
> the rental rather than lost.
The personal part of property taxes and mortgage interest goes on on
Schedule A. The business part of these items goes on Schedule E which
you deduct against your rental income. So if your Schedule A
deductions (for just 1 of the 4 units) are smaller than the standard
deduction, you're only losing part of the total property taxes and
mortgage interest. But then again, you'll get the 250K/500K exemption
when you sell your flat (but just on the unit you own if I'm not
mistaken).
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by Seth on April 30, 2008, 10:43 pm
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>My question is, is there any way around this? For example, using a
>partnership or corp to buy the property and then paying fair market
>rent to it for my unit. At least then the deduction would be had by
>the rental rather than lost.
But then you have to report your own rent as income, and pay tax on it
(or at least on the part that exceeds the property tax).
I don't know if you can buy the part you live in for cash, and apply
the full mortgage to the rental part.
Seth
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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<< to this newsgroup as well as our anti-spamming policy >>
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Posted by removeps-groups@yahoo.com on May 2, 2008, 1:20 pm
Please log in for more thread options On Apr 30, 7:43 pm, se...@panix.com (Seth) wrote:
> But then you have to report your own rent as income, and pay tax on it
> (or at least on the part that exceeds the property tax).
Is this really required?
> I don't know if you can buy the part you live in for cash, and apply
> the full mortgage to the rental part.
This sounds like a good idea, but don't know if they allow it. In a
TIC you buy a fraction of the building (say 1/4), so maybe it is
doable, but there may be local laws to look at.
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2007) - All rights reserved. >>
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Posted by Stuart Bronstein on May 3, 2008, 11:02 am
Please log in for more thread options > @panix.com (Seth) wrote:
>
>> But then you have to report your own rent as income, and pay tax
>> on it (or at least on the part that exceeds the property tax).
>
> Is this really required?
If that's the way he sets it up, those are the rules he has to comply
with.
>> I don't know if you can buy the part you live in for cash, and
>> apply the full mortgage to the rental part.
>
> This sounds like a good idea, but don't know if they allow it. In
> a TIC you buy a fraction of the building (say 1/4), so maybe it is
> doable, but there may be local laws to look at.
It can be done on an accounting basis alone. If the place will cost
$200,000 and he will use 25% as his personal residence, he could pay
25% down. That would represent payment for his personal portion, and
the rest could be applied to the business portion.
Stu
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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