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tax return question

Discussion in 'BBS Hangout' started by asianballa23, Mar 16, 2015.

  1. asianballa23

    asianballa23 Member

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    hope we got some clutch cpa in the house?


    Trying to settle a debate with my folks.

    They have a rental house that used my name for financing/mortgage purpose only, but all the rental income go to them and property taxes and expenses they take care. Who should claim this rental property on their tax return?

    this house is in sugar land.
     
  2. larsv8

    larsv8 Contributing Member

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    Yes, it's income.
     
  3. MosKeemYao

    MosKeemYao Member

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    did it make any money if not it is a moot point...
     
  4. TheresTheDagger

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    Duh.

    The question is WHO'S income.
     
  5. Panda23

    Panda23 Member

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    Should wish u were in straya, dat negative gearing
     
  6. platypus

    platypus Member

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  7. danod

    danod Member

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    The rental income is their responsibility but you get to claim the mortgage interest deduction.
     
  8. chow_yun_fat

    chow_yun_fat Contributing Member

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    You claim the property on your tax return as you are the legal owner.

    You are unable to claim tax reduction for property taxes and mortgage insurance since you did not pay for them, your parents did with the rental income. Your parents need to realize the profit minus expenses on their tax return. You might be able to claim mortgage interest because the 1098 is going to go to you.

    That's off the top of my head, could be wrong. I can find out a definite answer Wednesday.
     
  9. tested911

    tested911 Member

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    Can you guys recommend a good CPA, or tax office.. I haven't done my taxes yet :( Sorry for the last minute request guys.

    Somewhere near Sugarland,Mo-city, Stafford is preferred.
     
  10. asianballa23

    asianballa23 Member

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    yes if you don't mind confirm that please, thanks
     
  11. dragician

    dragician Member

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    whose.
     
    1 person likes this.
  12. wekko368

    wekko368 Member

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    This is correct.

    This is incorrect.
     
  13. chow_yun_fat

    chow_yun_fat Contributing Member

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    If he's not recording any profits on the property, there's no profit to deduct on his schedule c. Therefore, what deductions will he be eligible for?

    Also, if the IRS did an audit, they would see that he did not pay for the taxes from his bank account. Therefore, he is unable deduct an expense that was paid for by someone else.
     
  14. wekko368

    wekko368 Member

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    "profit to deduct on schedule c"? What does that mean?

    Gains and losses from rental properties are reported on Schedule E. If rental expenses exceed rental incomes, then you can take a loss up to $25,000. This loss can be used to offset your ordinary income.

    Even if your rental property generates positive cash flows, you could have a tax loss since your rental expenses would include depreciation which is a non-cash expense.

    If the IRS conducted an audit (which they wouldn't), the burden would be on them to prove that asianballa didn't pay the property tax. And who cares if his bank account doesn't show a property tax payment?

    "Mr. Tax-man, my parents paid the property tax, but it was a gift to me. And since the gift was less than $14,000, it's not a taxable event."

    If asianballa is claiming the rental property on his tax return, there's no reason for his parents to say he didn't pay the property tax. That would essentially be them taking money out of asianballa's pocket and giving it to the government. I doubt his parents are that cold-blooded.
     
    1 person likes this.
  15. B-Bob

    B-Bob "94-year-old self-described dreamer"

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    I'm no tax expert, but I would advise against bringing the World Health Organization into your federal return. That might get flagged.
     
  16. Haymitch

    Haymitch Custom Title
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    Stopped reading there. OP, I am a tax expert (I did my own taxes this year on TurboTax) and I fully recommend using the World Health Organization to get a bigger refund.
     
  17. bobrek

    bobrek Politics belong in the D & D

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  18. chow_yun_fat

    chow_yun_fat Contributing Member

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    You're right, I forgot about the gift of $14,000 per parent to child that is nontaxable.

    Basically he can take the rental property as a loss (property tax, insurance, interest) against his income? Sweet deal for asianballa imo.
     
  19. MosKeemYao

    MosKeemYao Member

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    I doubt he can get the deduction i mean he has to have a MAGI of less than 100,000. then again his folks are paying for the stuff.
     
  20. juicystream

    juicystream Contributing Member

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    Do your parents own the house at all?
     

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