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Posted by Brew1 on July 24, 2007, 11:52 pm
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> The 2nd lot is next to our 1st home, so after some research
> we found since the lot is next to our first home lot, then
> we can slide that lot under an extension of types of our 1st
> home and write off the property. However, before we got the
> lot we did buy the 2nd home in SC, and as of this year we
> are renting it all year around. I have spent some more time
> on the phone with our CPA, and since we rent it out we have
> no deductions because the property does not have any gains,
> and we are only able to take losses on the property if it
> gains positive revenue, however we can not take the money
> that we pay in interest to the property unless we plan to
> kick the renters out, which is less of a write off then
> renting it, however I have to find a way to convert it into
> a positive cash flow, but all that seams a bit of BS to me,
> because as of this point it sounds like I will not get
> anything out of paying the mortgage with or without renters,
> and it makes it sound liking buying 1, 2, or more properties
> to help convert my investing, will not curve the IRS 47%
> chunk they took out of our income last year, and looks like
> they will do this year.
>
> We are looking for a new CPA, but we need one that knows
> ebiz, and is in Virginia. It's a slow process to find a CPA
> that does not just run the numbers, but gets out and looks
> at your biz model and tells you how you should setup your
> biz and life to reduces taxes.
You can deduct expenses (such as mortgage interest) for the
second house on your Schedule E, not on your Schedule A. If
your expenses exceed the rental income AND you meet the
criteria for active involvement in the rental property, you
may be able to take a loss on the rental property. However,
if your income is too high, you can only use expenses to
offset rental income, and your CPA was essentially correct.
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