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Started By
Message
Buying a house for my mother-in-law turned into a great tax shelter
Posted on 3/30/15 at 9:24 am
Posted on 3/30/15 at 9:24 am
I bought a house for my mother-in-law last year after she got kicked out of public housing.
I've declared it a rental property. I only charge her $200 a month fir rent and wrote on the lease that she would never be evicted for failure to pay rent. Plus zero security deposit. All I really care about is that the rent covers the property tax and insurance.
This has turned into a great tax shelter. My accountant says I will be able to use it as a depreciation deduction for 27 years or until I sell the house.
Along with a tax credit for putting my daughter through college, I ended up getting $1000 from the government for money I didn't even pay in taxes. No wonder the government runs a deficit. I'm pretty well off and can afford to pay taxes.
BTW, the tax accountant was impressed with my interest and dividend income. He said I was smart with money whereas 90% of the people he does taxes for don't have that.
He told me that one of his clients had 120 pages of stock transactions with big capital losses and $13,000 in brokerage fees.
I've declared it a rental property. I only charge her $200 a month fir rent and wrote on the lease that she would never be evicted for failure to pay rent. Plus zero security deposit. All I really care about is that the rent covers the property tax and insurance.
This has turned into a great tax shelter. My accountant says I will be able to use it as a depreciation deduction for 27 years or until I sell the house.
Along with a tax credit for putting my daughter through college, I ended up getting $1000 from the government for money I didn't even pay in taxes. No wonder the government runs a deficit. I'm pretty well off and can afford to pay taxes.
BTW, the tax accountant was impressed with my interest and dividend income. He said I was smart with money whereas 90% of the people he does taxes for don't have that.
He told me that one of his clients had 120 pages of stock transactions with big capital losses and $13,000 in brokerage fees.
8
Posted on 3/30/15 at 9:31 am to samson'sseed
Congrats?
Posted on 3/30/15 at 9:57 am to samson'sseed
Sweet brag thread?
Actually, if you were pretty well off then you wouldn't have qualified for this credit.
quote:
Along with a tax credit for putting my daughter through college, I ended up getting $1000 from the government for money I didn't even pay in taxes. No wonder the government runs a deficit. I'm pretty well off and can afford to pay taxes.
Actually, if you were pretty well off then you wouldn't have qualified for this credit.
Posted on 3/30/15 at 10:03 am to samson'sseed
Hey thanks for nothing!!! LOL. I have two rental properties and bought the mom a house in 2004. I wasn't thinking.. just realized in January that I should've declared it a rental property also. Oh well...
Posted on 3/30/15 at 10:28 am to Tigerfan56
You do not know what you are talking about.
The education credit is available to everybody.
All taxpayers get a federal form of the amount of tuition they payed.
You get to deduct up to $2000 from your taxes.
The education credit is available to everybody.
All taxpayers get a federal form of the amount of tuition they payed.
You get to deduct up to $2000 from your taxes.
This post was edited on 3/30/15 at 11:36 am
Posted on 3/30/15 at 10:32 am to samson'sseed
quote:
You do not know what you are talking about.
Followed up with
The education credit is available to everybody.
Which is not true
It's subject to income limitations
Posted on 3/30/15 at 10:35 am to samson'sseed
FYI if you were really crushing it you wouldn't be able to claim all of your deductions from the rental, most would be carried over.
Unless you are a real estate professional since they can take unlimited losses. One reason I am starting to suggest my wife get her real estate license....
Unless you are a real estate professional since they can take unlimited losses. One reason I am starting to suggest my wife get her real estate license....
Posted on 3/30/15 at 10:45 am to samson'sseed
quote:
This has turned into a great tax shelter. My accountant says I will be able to use it as a depreciation deduction for 27 years or until I sell the house.
I hope your accountant advised you about renting to family members at below market rates. In the unlikely event that you're audited you may be in for a big surprise.
Posted on 3/30/15 at 10:57 am to Layabout
quote:
I hope your accountant advised you about renting to family members at below market rates. In the unlikely event that you're audited you may be in for a big surprise.
Yep.
This thread did not go how the OP thought it would.
Posted on 3/30/15 at 11:29 am to Layabout
quote:
I hope your accountant advised you about renting to family members at below market rates. In the unlikely event that you're audited you may be in for a big surprise.
I knew there were basis implications for property transactions between related parties. Didn't know about this specific rule with renting to related parties. Can't say I'm surprised this is a thing though.
Posted on 3/30/15 at 11:31 am to Layabout
"I hope your accountant advised you about renting to family members at below market rates. In the unlikely event that you're audited you may be in for a big surprise."
Bingo, I'll forward this to my IRS agent friend.
Posted on 3/30/15 at 11:33 am to eng08
They are being carried over, dumbass.
Posted on 3/30/15 at 11:35 am to TigerDeacon
I never anticipate how my threads will go.
They usually get an overwhelmingly negative response from the stupid rednecks who post here.
They usually get an overwhelmingly negative response from the stupid rednecks who post here.
Posted on 3/30/15 at 11:37 am to Layabout
Why would getting less income through rent be penalized by the IRS?
You are full of shite.
You are full of shite.
Posted on 3/30/15 at 11:44 am to samson'sseed
quote:
They usually get an overwhelmingly negative response from the stupid rednecks who post here.
At least you're here to combat them all, and upvote your own posts
Posted on 3/30/15 at 11:51 am to Tigerfan56
quote:
Actually, if you were pretty well off then you wouldn't have qualified for this credit.
That would be based on income not net worth, he could be worth 50 million and only taking minimal income form his assets.
Posted on 3/30/15 at 11:54 am to Tigerfan56
So many testy people on a Monday AM.
A below market rental rate will definitely impact allowable deductions related to the property (IIRC, you can only deduct expenses up to and equal to the amount of rent charged). Losses cannot be deducted, nor carried forward in excess of your rental income.
Any decent CPA can advise you about renting at a below market rate to a relative, and how it affects your circumstances.
A below market rental rate will definitely impact allowable deductions related to the property (IIRC, you can only deduct expenses up to and equal to the amount of rent charged). Losses cannot be deducted, nor carried forward in excess of your rental income.
Any decent CPA can advise you about renting at a below market rate to a relative, and how it affects your circumstances.
Posted on 3/30/15 at 11:58 am to samson'sseed
quote:
A day of personal use of a dwelling unit is any day that it is used by:
•You or any other person who has an interest in it, unless you rent your interest to another owner as his or her main home under a shared equity financing agreement
•A member of your family or of a family of any other person who has an interest in it, unless the family member uses it as his or her main home and pays a fair rental price
•Anyone under an agreement that lets you use some other dwelling unit
•Anyone at less than fair rental price
quote:
If you use the dwelling unit for both rental and personal purposes, you generally must divide your total expenses between the rental use and the personal use based on the number of days used for each purpose.
LINK
Posted on 3/30/15 at 12:10 pm to samson'sseed
I don't understand the need for name calling.
Posted on 3/30/15 at 12:15 pm to samson'sseed
quote:
I never anticipate how my threads will go
I think we can all agree this is obvious.
quote:
They usually get an overwhelmingly negative response from the stupid rednecks who post here.
And yet these "stupid rednecks" are trying to lead you out of your ignorance by providing you actual knowledge. You are the one bragging about your situation while reveling in your blissful ignorance.
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