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Old 04-05-2011, 05:57 PM
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Primary Residence then Rental

Bought my home in 2001 lived in it til 2006 and started renting in 2007 then sold in 2010. I have been renting since 2007. Can I claim the mortgage interest for the part of the year I owned it in 2010?



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Old 04-05-2011, 10:44 PM
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“Bought my home in 2001 lived in it til 2006 and started renting in 2007 then sold in 2010. I have been renting since 2007. Can I claim the mortgage interest for the part of the year I owned it in 2010?”----> I assume that you rent part of the home, then as long as you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for your personal purposes, as though you actually had two separate pieces of property. You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity, or painting the outside of the house.There is no change in the types of expenses deductible for the personal-use part of your property. Generally, these expenses may be deducted only if you itemize your deductions on Schedule A.



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Old 04-06-2011, 04:49 AM
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Hi,
So great is the principal residence tax exclusion that even married couples filing ... Gone are the days when the young homeowner (not wishing to sell and ... You can primary more than one home at once over a five year period so long ... If you have a home office or rental as part of your primary residence.
.............
melkinny



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Old 04-06-2011, 04:50 AM
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Hi,
My clients' primary home was in Napa with a rental in Florida. ... Did they remember to revoke their property tax homeowner's exemption? ... from Florida to another state with basis of $500k in primary residence.
...............
melkinny



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Old 04-12-2011, 06:10 PM
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My Home Rental is Slightly Different

I own my house, free and clear, with no mortgage. I lived in it for 13 years. I
moved to a foreign country and now live out of the U.S. 10 months a year and in my stateside home 2 months a year. I rent my house for much
of the 10 months I'm gone and declare all monies collected from rentals when
filing my federal taxes. Am I legally able to do this? If so, any repairs, maintenance, utilities, % of property taxes, homeowner's insurance and other legiitmate expenses relating to the rentals should be allowable. Am I correct?



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Old 04-12-2011, 10:27 PM
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“Am I legally able to do this?”---->Yes; I think so. As you can see, as either a US citizen or US resident UNDER either US Tax Law or US INS Rules, you are liable for taxes, federal and state taxes( if applicable; actually nine states do not impose income taxes to their residents in US on your worldwide( I mean your income that you earn overseas) and US source income( your rental income in US).Also remember: as long as you pay your income taxes to the foreign taxing authority, you can claim your taxes paid to the foreign taxing authority on your US federal return , BUT not on your state return. You, as a qualifying U.S. citizens and resident alien who live and work abroad, may be able to exclude from your income all or part of your foreign salary or wages, or amounts received as compensation for your personal services. In addition, they may also qualify to exclude or deduct certain foreign housing costs
I guess you May visit the IRS Websites here for more info; Foreign Tax Credit
Foreign Earned Income Exclusion - Requirements
“ If so, any repairs, maintenance, utilities, % of property taxes, homeowner's insurance and other legiitmate expenses relating to the rentals should be allowable. Am I correct?”----> I guess it depends; as your residence is rented for 15 days( you actually rented it out for 10 months, about 300 days) or more and is being used for your personal purposes for more than 14 days or 10% of the days rented, 30 days, 10%*300 days, whichever is greater, allocable rental expenses are allowed only to the extent of our rental income. What I mean is that your residence is subject to both Rental/Personal Use. So, your allowable rental expenses are USUALLY deducted in three separate steps. For example, assume that you rent your residence for $2,500 a month for 10 months and use it for personal purposes for 65 days, and also asssusme that your expenses are; r/e taxes, $4,000, utilities and maintenance( or repairs or etc.) $7,000, and depreciation(annual I mean) $15,000, then the IRS requires you to calculate your rental income and loss as follows: you need to use Sch E of 1040.
Your Gross rental income;$25,000; $2,500* 10 months
Less your r/e taxes ;($3,288); 360/365*$4,000
Balance ; $21,712; $25,000-$3,288
Less :utilities and main; ($6,904); $7,000*360/365
Balance ;$14,808
Less :depreciation ; $14,808
Net income ; $0; $14,808-$14,808=$0
The remaining r/e taxes $712($4,000-$3,288) is deductible as itemized deduction on 1040 SCh A if you itemize your deductions on the Sch A; if you take your standard deduction instead of itemized deductions, then you can’t deduct your/e tax expense, $712.Personal portion of utilities and main. Expenses,$96; $7,000-$6,904, and depreciation, $192; $15,000-$14,808, is a NONDEDUCTIBLE personal expense.



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Old 05-25-2011, 06:04 AM
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Hi,
I lived in it for 11 years. I moved to a foreign country and now live out of the U.S. 10 months a year and in my stateside home 2 months a year. I rent my house for much of the 10 months. I'm gone and declare all monies collected, from rentals when filing my federal taxes. Am I legally able to do this?


Last edited by TaxGuru : 08-24-2011 at 08:54 AM.


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Old 05-25-2011, 03:11 PM
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“ I'm gone and declare all monies collected, from rentals when filing my federal taxes. Am I legally able to do this?”--->Yes; you must pay tax to the IRS on your rental income; as long as you receive taxable income from the rental of a dwelling unit, such as a house or an apartment, there are also certain expenses that you may deduct on your tax return. You will generally report such taxable income and expenses on Form 1040, Schedule E.However, since you also use the dwelling unit as a home, for two months a year as you said, certain restrictions, vacation home limitations RULE, apply to the tax deduction of your rental expenses on your tax return. You are considered to use a dwelling unit as a home if you use it for personal purposes during the tax year for more than the greater of: 14 days; or 10% of the total days it is rented to others at a fair rental price. So, your allocable rental expenses are allowed ONLY to the extent of your rental income. Your allocable rental expenses are deducted in three separate steps; first the interest and taxes are deducted, second, utilities and maintenance expenses are deducted, and third, depreciation expense is deducted. For utilities, maintenance, and deprecation expenses to be deductible, there must be positive income following the deduction of items in the proceeding steps. In other words, the expenses, other than interest and taxes, are only deductible to the extent of that positive income.For instance, assume that you rent your US home for $12,000 for 305 days and use it for 60 days for personal use and you have operating expenses as follows ;interest and taxes; $4,000, utilities and maintenance; $5,000, and depreciation; $5,000, then the IRS requires that your rental income or loss be calculated as follows;
Your gross rental income; $12,000
Less: interest and taxes;($3342);305/365=84%*$4,000; you can deduct the remaining $658($4000-$3,342) on your Sch A
Bal.$8,658
Less: utilities and maintenance ($4,200); 305/365*$5,000; you can’t deduct the remaining $800($5,000-$4,200); it is non-depreciable personal expense.
Bal.$4,458
Less; depreciation; ($4,200);305/365*$5,000; you can’t deduct the remaining $800;($5,000-$4,200); it is non-depreciable personal expense.
Net income;$258.
So, you need to report $258 on 1040 line 17.


Last edited by Wnhough : 05-25-2011 at 03:32 PM.


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Old 07-25-2011, 07:37 AM
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I am also going to ask the same questions and I have the somehow similar problem. Thanks for all discussion. I have got my answers to some questions.



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