Originally Posted by Wnhough
I am trying to determine what amount of individual taxes are associated with the ownership of a rental property? ====>>>>>>>you need to report your rental income/deductible expenses on your sch E / f1040 line 17; If you do not rent your property to make a profit, you can only deduct your rental expenses up to the amount of rental income. You can recover the cost in ental property through depreciating the property. Depreciating the property means you deduct some of the cost on your tax return each year. Depreciation is based on the expected life of the item. 27.5 year for the home; when you earn gain on the sale of the home, youmust recapture sec 1250 depreciation taxed at 25% ON YOUR RETURN AS ORDINARY INCOME.
I took over ownership of my parents property 7 years ago (they now rent from me). The only other property I own is my personal home which is 15 years old. Last year I found myself owing a considerable amount ~ this year it is double what I owed last year. I have a sibling who is willing to help with this added burden and I'm trying to figure out how to calculate what portion of this tax debt is associated with the 2nd property ownership. =======>>>>> I do not think it is attributable to your rental income; The amount of taxes you pay depends on whether you make any profit from it. If you are unfortunate to suffer losses (massive repairs, paid more mortgage than what you collected in rent, etc.) then those losses can offset your income YOU, AS a Landlord, sometimes make a small profit on your rental income because rental income is usually sufficient to pay the mortgage, and plus a little extra for property taxes, insurance, and repairs.
Thank you for your reply. My situation is actually reversed from how it was worded. My sibling is asking me to pay their personal taxes for the 2nd year ~ claiming that their personal taxes have increased because of the added property (my parents home that they weren't able to obtain on their own).
Last year we meet with an attorney to go over many things ~ his spent a lot of time explaining the need to keep receipts, track mileage and time spent on the property. I explained last year that I was helping once and that they would need to follow the steps outlined to avoid this situation from occurring in the future. It's tricky for me to get the point across without damaging the family relationship.
I appreciate your guidance, I find myself needing to re-state this again to my sibling and am looking for new words to explain that this debt owed is theirs and not mine.