Hi,
My brother and I jointly own a condo that our mother is living in, rent-free. I was told I can't take my share of the property tax off of our taxes because it is not my primary residence. Is this true?
Thank you!!
Nope. If you pay the property tax for real property you own anywhere, it can be deducted either against rental income or on Schedule A. Mortgage interest is limited to first and second home only.
You may have a not-for-profit rental activity, and you are making a gift of the rent to your mother.
-Mark Bole
Many thanks for your help! It's appreciated! :)
If you have a not-for-profit rental, then expenses are limited to the amount of income, right? And what about depreciation? Seems you have to take depreciation, but then can't deduct it because your rental income is zero.
Anyway, is there a requirement that the home has to be treated as a rental? Couldn't it just be an investment home owned by the brother and sister, in which case depreciation and the complications of Schedule E don't arise.
You may need to file a partnership return 1065 to split the property tax between you and your brother.
Well, the imputed rent would not be zero. There would be rent, and then a gift of the rent.
I thought about that after I posted. Without taking the time to research the pubs for things I read once and only half-remembered, I think you are right. Better yet, it could just be a second home that a close relative is living in (might not apply if it was a non-related person).
In fact, if the parent has little income and more than half the support (including free rent) is provided by either or both children, there might be a dependency exemption and even head of household -- sorry for the sloppy reply, it is April 14th after all. That is the power of "may" and "might"! ;-)
Now, that one I'm pretty sure is not the case, no matter what. Expense and income splitting on a passive activity rental property is allowed on Schedule E.
-Mark Bole
I have a different perspective here.
If you are renting below fmv, or allowing a relative to live rent free, it would simply be treated as a personal residence. So, if you only have one other personal residence you could then deduct the mortgage int & property taxes.
Benjamin Yazersky CPA wrote: [...]
That was actually my second idea, (see quoted text earlier).
To bring the thread back to the beginning, there is no limit on how many real properties you can deduct ad valorem taxes on. Only personal mortgage interest is limited to at most two properties.
-Mark Bole
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