Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-08-2012, 01:12 AM
Junior Member
 
Join Date: Feb 2012
Posts: 1
Inherited property & HIGH cost of RE Taxes

My parents are in their 70’s receiving SS benefits and a non gov. pension and own a SFH, with no mortgage.

Several years ago, they inherited my grandmother’s SFH. This property also has no mortgage, is in good condition, and has remained unoccupied. Since this is not their primary residence, it costs $12,000 a year in real estate taxes! They do get an exemption on RE taxes for their primary home.

I help with expenses where I can, but live out of state.
My parents are just not ready to sell this inherited property and are hesitant to rent to someone at full market, as they fear this would affect their SS/pension income.

I suggested renting the property to a local relative for $1000 a month, which would just cover the cost of $12,000 RE taxes and make no profit.

Would this still affect their SS benefits and pension?
What are the tax implications?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 02-08-2012, 03:28 PM
Moderator
 
Join Date: Oct 2010
Posts: 4,836
“I suggested renting the property to a local relative for $1000 a month, which would just cover the cost of $12,000 RE taxes and make no profit.Would this still affect their SS benefits and pension?”-----> The SSA regularly adjusts the amount that a person receiving SS benefits.If they file a joint return,they will have to pay taxes if they have a total income(provisional) of more than $32,000. In general, pensions count as income, also IRA or 401K withdrawals and any investment income that they have ,i.e., capital gains, interest, dividends. Basically, anything that counted as income before they retired that they are still getting, counts as income after they retire. Depending on their total income, their social security might be partially taxable or not. However, yourparents’ pension(as long as their pension plan it is funded by their former ER(s) and they only collect after they have worked for the company )is from work where they paid Social Security taxes, it will not affect the amount of their Social Security benefits. A pension based on work that is not covered by Social Security (for example, Federal civil service and some State or local government agencies) may cause the amount of their Social Security benefit to be reduced.For example, your parents must file Sch E of 1040 to report their rental income, $12,000 and expenses of renting the SHE property can be deducted from their gross rental income. They generally deduct their rental expenses in the year they pay them. So, UNLESS the provisional income of your parents is MORE than $32,000, they are NOT subject to tax on their Soc Sec benefits. Assume that their net rental income (I mean rental income- expenses on Sch E )is $4,000 and their taxable private pension income is $5,000, then their AGI is $9,000;$4,000+$5,000 and their provisional income is $20,000;$9,000+50% of their Soc Sec benefit, $11,000( I assume it is $22,000). Then their provisional income is LESS than $32,000, they are NOT subject to tax on their Soc Sec benefits.So, it depends on their provisional income.
Please visit the SSA Website: Contact Social Security By Phone
Benefits Planner: Taxes and your Social Security benefits
“What are the tax implications?”--->As described above; it depends on their provisional income.


Last edited by Wnhough : 02-08-2012 at 04:22 PM.


Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
sale of inherited property ? Rateye Capital Gains 7 09-25-2013 05:14 AM
sale of inherited property sunnysouth Capital Gains 3 02-04-2012 01:40 PM
US capital gains tax on sale of foreign inherited property jkoshi Capital Gains 6 01-24-2012 04:51 AM
Selling Inherited Property JBB6354 Capital Gains 1 10-29-2010 08:25 AM
Capital gain on inherited property gbayes Capital Gains 1 04-11-2010 10:20 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning