The IRS Deductions Blog

Posts Tagged ‘realestate’

Question: Business Loss or Landlord Deduction?

I have property that I am currently renting. This property is mortgaged and I am able to deduct my interest from my taxes. However, the rental income I receive does not cover the mortgage or my expenses (that is, because of the market, I charge less in rent that I pay in mortgage and maintenance each month). Is it possible to declare this loss on my taxes? I know I have to report the rental income, but it seems I should also be able to report this loss. Is it a business loss or is this considered part of my “expenses” on advertising/caring for the property? Are there specific forms to use (like form c for business loss)?
This property is in another state – so it is not a shared duplex. If I use TurboTax, will this automatically fill out items on Form E, including this loss (I know TurboTax uses this form to allow me to deduct expenses).

Answer: Yes, you would report rental income and expenses on Schedule E of Form 1040. You would report any expenses involved in the rental property, i.e. interest, taxes, insurance, utilities, maintenance, repairs, advertising, etc. Dont forget that you are also able to deduct depreciation on the property and any improvements. The basis used is usually your cost. If you converted your home to rental property, you would use the lesser of the fair market value or adjusted basis. The recoverable period for residential rental property is 27.5 yrs.

If 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 personal purposes, as though you actually had two separate pieces of property.

Yes, Turbo Tax will automatically generate a Schedule E. It will ask you questions regarding your rental property and automatically fill out the required forms, including Form 4562 for depreciation.

Items on Amazon Right Now for Landlord Tax Deductions:

7 Smart Steps Every New Homeowner Should Take

Dont let the excitement of owning your own home lead you to make bad financial decisions.

Rental Property Advice : How Much to Charge for Rent

Question: I bought a home in May and was wondering what items off the closing statement are deductible?

Pretty much was wondering what I can deduct on top of the interest I paid monthly and the PMI

Answer: Very very little.

1) Points and Loan Origination Fees (if any) paid at closing.
2) Property Taxes

Besides interest and PMI, that is it.

Note: If you qualify, don’t forget about the first time home buyer’s credit.

Items on Amazon Right Now for Deductible Pmi:

Welcome Home: Tips for first-time home buyers

Renting comes with benefits but if you’re looking to say goodbye to your landlord and have your own white picket fence, there are ways to educate yourself to make the process of buying easier, as outlined in a recent class

PMI, Yes you Can Deduct!!!

Question: what is tax deduction rate on professional services and rent ?

on which services we should deduct the tax as salary, professional charges and………………..? and when we deposit it in bank and when we should submitted the return for that?

Answer: For professional services u/s 194J
Rate is 10.3% for Individuals Professional fee is less than Rs.10 lakhs for others less than Rs.1 Crore
Rate 11.33% for Individuals Professional fee is more than Rs.10 lakhs for others more than Rs.1 Crore

For Rent u/s 194 I
Individuals 15.45% (less than 10 lakhs) 16.995% (More than 10 lakhs)
Others 20.6% (less than 1 Crore)

Salary arises only if there is employer-employee relationship exists. Else professional fee only

You have to deposit within 7th of the following month
You have to file return before 15th of the following month to quarter ended date (e.g Jan 15 for quarter ended Dec 31)

Items on Amazon Right Now for Tax Deduction Rent:

Competing proposals head for committee in tax debate

AUGUSTA, Maine — The debate over taxes soon will take center stage in the Legislature as lawmakers on the budget-writing committee take up competing proposals to lower Mainers’ tax burdens. Republican members of the Legislature’s Taxation Committee have come up with a plan they say would simplify the state’s tax …

Why rent when you can own?!!

Question: Mom and I sold our condo, how do we each report the taxes?

My mom and I owned a condo for 1 yr and 9 months in WA state. We sold it and we’re trying to figure out how to split the resulting profit (approx $40K total). We each received wire transfers from the escrow company for $20K. Now it’s tax time and we’re trying to figure out what deductions are available, and how to report any applicable taxes and what the proper forms for this might be? In particular, we are wondering if we can include the closing costs we incurred as an adjustment to our cost basis and ultimately reduce the portion of the $20k that is taxable. Also, as I changed jobs 6 months after we bought it (bought in June 2004, sold in Feb 2006). Wondering if I can take a partial exclusion on capital gains due to having job location changes in Nov. 2004, and again in July 2006). Neither job change was out of state but did effect length of my commute. Thanks so much!

Answer: The first answer is incorrect in the final paragraph. You can, indeed, claim a partial exclusion provided you meet certain conditions. See the link below, in particular page 15. The issue I see is that you changed jobs in Nov 2004 but did not sell it until Feb 2006. That might be viewed as an excessive length of time to hold the property after changing jobs.

Items on Amazon Right Now for Condo Tax Deductions:

Ten tax tips to save you money

Millions of Canadians pay more tax than they should. Moneyville’s weeklong continues with the sorts of tips that will help you avoid the same fate.

Homebuyer tax credit information

Question: Is a property tax deductible if you’re a Builder or Developer in Australia?

How can you make land or property tax deductible in Australia? Is there a way or can anyone?

10 points for best answer! Thanks!

Answer: Land tax, council rates and other property taxes are generally tax deductible in the following cases…

1. You are in the ‘business’ of property development ie. you build houses/develop property for the purpose of selling them for a profit on completion. If this is the case, all land and buildings held are considered to be trading stock rather than capital items (assets), all receipts from property sales are ‘income’ in the year received/entitled and all costs associated with the development of properties are ‘expenses’ in the year paid/incurred, depending on the accounting method used.

2. The properties are rented out on completion. Most non-capital expenses incurred in holding and maintaining the property, including land tax etc. are deductible in the year paid, while the property is being rented out.

Note that there are requirements and exceptions to the above, as is always the case with tax legislation.

Items on Amazon Right Now for Deductible Property Taxes:

Take-Two Interactive Software, Inc. Reports Results for the Three and Twelve Months Ended October 31, 2010

Take-Two Interactive Software, Inc. today announced financial results for the three and twelve months ended October 31, 2010. In addition, as previously announced, the Company’s Board of Directors has approved a fiscal year-end change from October 31 to March 31.

Property Tax