The Landlord Protection Agency  
Main Menu, Landlord Protection Agency homepage Membership With The Landlord Protection Agency Free Landlord Services Member Services  

Mortgage tax deductions for co-owned rental house - Landlord Forum thread 358975

Free Landlord Newsletter

Prospect Card

FREE BONUS Forms Disk for
2 -5 year LPA Members


Mortgage tax deductions for co-owned rental house by on January 28, 2019 @03:40

Me and my son purchased a $1.4 million house with $1.2 million of loan in 2018 and rented out a few rooms while my son lived there too. When filing tax return, can I claim tax deduction for $0.6 million of mortgage and my son also claims $0.6 million of mortgage? Or me and my son can only claim a total tax deduction of $0.75 million of mortgage for 2018? Thank you in advance for your pointers.
[ Reply ] [ Return to forum ]

Re: Mortgage tax deductions for co-owned rental house by Garry on January 28, 2019 @10:27 [ Reply ]
If you and your son are 50/50 partners, then everything (income, expenses,and depreciation ) is split half and half. You cannot claim the "mortgage". Only the INTEREST on the mortgage. Taxes and insurance you paid, are also deductions (split 50/50.) Any costs you paid to fix up the property BEFORE you started renting it out, must be added to the $1.4 mill you paid for the house, to get a final figure, to use for depreciation/tax purposes.

Then, for dep. and IRS purposes, you must take out an amount equal to 10-15% for the value of the land. The IRS says land cannot be depreciated, so you set that figure aside. You will not use the land value again until you sell the place. Lets say you come up with a final figure for dep. purposes of $1.2 mill. That must be divided by 27 years, and then split between the 2 of you. So, your gross income, less any expenses and depreciation, is what you will be paying taxes on. (again, all split 50/50. However, my guess is, that figuring in your dep., you both will have a "negative" income (loss), that will be able to go against any other income you had last year. And you may very well have a "loss" for the next 5-10 years. The bad news is, you will have to "recapture" all those "losses" when you sell the place 20-30 years from now. That means you will have a huge "gain" that you have to pay taxes on.
Re: Mortgage tax deductions for co-owned rental house by John on February 1, 2019 @11:16 [ Reply ]
First, and very important, note - pay attention to the personal use portion of this property. The expenses related to whatever portion your son are living in is not deductible.

Back the land out of your depreciation calculation using the value obtained from the assessor at date of purchase. Donít play games with 10% or 20% or whatever. Thatís sloppy.

Most important piece of advice, hire a CPA. It will save you money and problems in the long term.

Log in

Rentals Available
Rentals Wanted
Realty Brokers
Landlord Articles
Tips & Advice
Tenant Histories

Other Areas
Q&A Forum
Free Forms
Essential Forms
Landlord Tenant Law
Join Now
Credit Reports
About Us
Site Help

Contact The LPA

© 2000-2019 The Landlord Protection Agency, Inc.

If you enjoy The LPA, Please
like us on Facebook The LPA on Facebook
Follow us on Twitter The LPA on Twitter
+1 us on Google