Re: Mortgage tax deductions for co-owned rental house

Re: Mortgage tax deductions for co-owned rental house by Garry on January 28, 2019 @10:27

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.

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Re: Mortgage tax deductions for co-owned rental house by luchen26@hotmail.com on January 28, 2019 @13:07	[ Reply ]

Thank you Garry for the detailed explanations. Actually I my question is about the interests of mortgage: whether I can claim 50% of total interest of mortgage of $1.2 million? What I am not sure is: The IRS has limit of $0.75 million of mortgage per property or per owner or property? Also, split of other percentage such as 75/25 is ok too, right? thanks.

Re: Mortgage tax deductions for co-owned rental house by lpadave on January 28, 2019 @13:54	[ Reply ]

Gary I've always used 20 % for land. This seems to be the pretty commonly recommended ratio by the conservative CPAS and tax lawyers for a number of defensible reasons Your thoughts .?

Re: Mortgage tax deductions for co-owned rental house by luchen26@hotmail.com on January 28, 2019 @16:06	[ Reply ]

The county has appraisal each year for land value and house value and we got them each year.

Re: Mortgage tax deductions for co-owned rental house by lpadave on January 29, 2019 @04:07	[ Reply ]

GARRY see beloe

Re: Mortgage tax deductions for co-owned rental house by luchen26@hotmail.com on January 29, 2019 @14:28	[ Reply ]

Isn't the land value determined by county assessor office? Each year I see the land value was reported on county's letter for my house value, at lease this is done for California homes.

Re: Mortgage tax deductions for co-owned rental house - Landlord Forum thread 358979