Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-14-2009, 05:30 PM
Junior Member
 
Join Date: Feb 2009
Posts: 1
deductions for rental, now primary residence

almost 3 years ago we rented out our house and rented a bigger one for ourselves as we needed more space. Around 8 months ago our tenant moved out and the place was left with lot of damage to the carpet, walls/stucco and the plumbing was falling apart ( though no fault of tenants). We fixed up the property spent around 14 thousand dollars. While we were at it we also got the house painted from outside and made it attractive for new prospects. However, I had been out of job almost 10 months, the outlook was not too encouraging, also our landlord had increased our rent to 3000/- per month ( from 2600/-). Given the circumstances, it made sense for us to move back to our own house, which we did in September 2008.

My first question is that can we still deduct the cost of fixing up the house as a rental expense? Also, if the deductible part of mortgage payments, taxes and repairs are more than the rental income, can it be carried over to next year, though the house is no longer a rental property? I am back in the job and have purchased additional property so we will have future rental income but from a different property.

Thank you.



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 02-15-2009, 11:59 AM
TaxGuru's Avatar
Tax Guru
 
Join Date: Jan 2007
Location: New Jersey, USA
Posts: 2,417
Blog Entries: 3
It seems that your property was a rental property for part of tax year 2008 up until September 2008, and thereafter it become a personal residence. So, the issue of being able to deduct the cost of fixing the home becomes one of a timing issue! Did you initiate the work whilst the property was not occupied by you and if so, CPA's may choose to deduct these so called repair expenses on Schedule E.

But, if these expenses were incurred whilst you occupied the home, then they are not deductible on Schedule E and instead are to be capitalized and added to the basis of your home. In other words, they would not get expensed in 2008.

If the mortgage expense and property taxes are more than the rental income during the period Jan 08 thru to Sept 08, the excess of expenses over the rental income will generate rental real estate losses. These rental real losses are subject to passive activity loss limitations, namely if your adjusted gross income exceeds $150,000 they are not deductible.

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.


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



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
Primary Residence julioseventh Homeowner Tax 0 02-12-2009 04:58 PM
Tax advice for Residence in multiple states enrito2000 Multistate Tax Issues 1 07-15-2008 09:46 AM
Is the Property tax on a 2nd Residence Deductible? vanngo Itemized Deductions 0 03-06-2008 10:42 AM
Residential Rental Deductions Kathy Rental Real-Estate 1 01-16-2007 09:07 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
 
 
 

» Recent Tax Q&A
No Threads to Display.