My daughter's credit is currently bad due to a divorce. My wife and I bought a condo in our name that she is living in. Mortgage and title are in our name. She lives there and pay's for everything. Once her credit is restored we are going to sell it to her or put her on the title and let her refiance it in her name. In the meantime how do we treat this for tax purposes? Do we treat it like a rental and take depreciation, expenses etc. Can we treat it as a second home (It is in the same town we live in) and deduct interest property tax etc. Thanks in advance for your help
2007-02-03 06:29:36 · 3 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
You can treat it as a rental ONLY if she is paying fair market rent. If she's reimbursing you for the mortgage payments but they are less than the fair market rent for a similar property in the area your deductions are severely restricted.
If you can't treat it as a rental you probably can treat it as a second home and deduct the mortgage interest and property taxes.
See IRS Pub 527 for full details.
2007-02-03 06:57:30 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 0⤋
It's not a second home if you do not live in it at least part of the year.
If she is paying you rent, you have to declare the rental income (and associated expenses) on Schedule E of the 1040 long form.
2007-02-03 14:38:26 · answer #2 · answered by Anonymous · 0⤊ 0⤋
If she's paying rent, then you must declare that as "income". If she isn't, then the property is not a business, so you can't take a deduction for expenses on it!
You need to talk to an accountant!
2007-02-03 14:34:27 · answer #3 · answered by Anonymous · 1⤊ 0⤋