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Posted by Mike C on May 3, 2008, 10:28 am
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On
<I don't know if you can buy the part you live in for cash, and apply
the full mortgage to the rental part. >
I am sure you can't do that. That is like saying I am only going to
apply the property taxes and expenses to the rental units.
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Posted by Seth on May 4, 2008, 5:54 pm
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>On
><I don't know if you can buy the part you live in for cash, and apply
>the full mortgage to the rental part. >
>
>I am sure you can't do that. That is like saying I am only going to
>apply the property taxes and expenses to the rental units.
The property taxes are clarly for the entire building.
If it were purchased with a 100% mortgage, then the mortgage applies
to the entire building.
But suppose he puts 20% down, and lives in one of the six units. Can
he claim the 16.67% for his unit was paid in cash, and the 83.33% for
the other units was 3.33% cash and 80% mortgage?
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. >>
<< >>
<< 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 Mike C on May 5, 2008, 7:48 am
Please log in for more thread options On May 4, 4:54 pm, se...@panix.com (Seth) wrote:
>
> >On
> ><I don't know if you can buy the part you live in for cash, and apply
> >the full mortgage to the rental part. >
>
> >I am sure you can't do that. That is like saying I am only going to
> >apply the property taxes and expenses to the rental units.
>
> The property taxes are clarly for the entire building.
>
> If it were purchased with a 100% mortgage, then the mortgage applies
> to the entire building.
>
> But suppose he puts 20% down, and lives in one of the six units. Can
> he claim the 16.67% for his unit was paid in cash, and the 83.33% for
> the other units was 3.33% cash and 80% mortgage?
>
> Seth
That is the question. Though I have a degree in accounting, I am rusty
as I no longer work in accounting. My guess it there is no way you
can make that election. Why would the IRS possibly allow that? You
are buying one entity, and to allocate expense in that way would not
be allowed.
--
<< ------------------------------------------------------- >>
<< 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 May 5, 2008, 3:14 pm
Please log in for more thread options >On May 4, 4:54 pm, se...@panix.com (Seth) wrote:
>> But suppose he puts 20% down, and lives in one of the six units. Can
>> he claim the 16.67% for his unit was paid in cash, and the 83.33% for
>> the other units was 3.33% cash and 80% mortgage?
>
>That is the question. Though I have a degree in accounting, I am rusty
>as I no longer work in accounting. My guess it there is no way you
>can make that election. Why would the IRS possibly allow that? You
>are buying one entity, and to allocate expense in that way would not
>be allowed.
I'm allocating 1/6 of the cost to each of the six identical units.
I'm choosing to pay for my home with cash, and borrow money to buy the
rental units.
Seth
--
<< ------------------------------------------------------- >>
<< 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 Mark Bole on May 5, 2008, 4:35 pm
Please log in for more thread options Seth wrote:
>> On May 4, 4:54 pm, se...@panix.com (Seth) wrote:
>
>>> But suppose he puts 20% down, and lives in one of the six units. Can
>>> he claim the 16.67% for his unit was paid in cash, and the 83.33% for
>>> the other units was 3.33% cash and 80% mortgage?
>> That is the question. Though I have a degree in accounting, I am rusty
>> as I no longer work in accounting. My guess it there is no way you
>> can make that election. Why would the IRS possibly allow that? You
>> are buying one entity, and to allocate expense in that way would not
>> be allowed.
>
> I'm allocating 1/6 of the cost to each of the six identical units.
> I'm choosing to pay for my home with cash, and borrow money to buy the
> rental units.
With separate properties, each with a dedicated use, there is no need to
allocate anything. But a single property with mixed use requires
allocation. You are using the word "choosing" to mean "allocate", so
let's just stick with "allocate".
Allocation for tax purposes between business and personal use of a
building is usually based on square footage, or number of rooms or units.
But you are trying to "allocate" between business and personal use based
on ... business and personal use! This is not a meaningful allocation
for tax purposes, and I doubt anyone would find it reasonable in a tax
return.
-Mark Bole
--
<< ------------------------------------------------------- >>
<< 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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