Posted by ScottE on March 03, 2000 at 16:19:50:
Oh well, Tom, er, Inmate #2999377 that is, I guess you’ll have plenty of time to study!
Scott
(Brother of Dallas CPA and attorney Mark)
Tell me my Attorney is wrong…Please!!! - Posted by Jeff - MKE
Posted by Jeff - MKE on March 03, 2000 at 13:16:11:
I was told by my Attorney yesterday that the interest and property taxes i pay on an investment property is not tax deductable.
I was told that you can only claim your personal home and one other personal property.
Is this true?
What if i owned 50 rental properties?
Would i not have this tax shelter?
Now i’m not so sure i want to get in to this business if this is not a deduction.
Please help me with this.
Thanks Jeff
Re: Tell me my Attorney is wrong…Please!!! - Posted by Rob FL
Posted by Rob FL on March 04, 2000 at 17:42:53:
Show him Schedule E and have him explain what each of the expenses are. Oh wait maybe he never filled out a Scheudule E for anyone. Duh.
Technically, he’s right…but… - Posted by Dave T
Posted by Dave T on March 03, 2000 at 20:35:51:
Your attorney may have been a little too brief in his explanation. We typically itemize our deductions on Schedule A and your costs of owning and operating an investment rental property are not deductible (on Schedule A).
The costs of owning and operating an investment rental property are really operating expenses – not deductions. Your mortgage interest, taxes, insurance, management fees, utilities, maintenance, repairs, legal fees, trash collection and most anything else you pay as a cost of operating an investment rental is an operating expense.
Now here’s the good part. Operating expenses are used to offset rental income on a dollar for dollar basis. You report your rental income and your operating expenses on Schedule E. You even get to further reduce your operating income by taking a depreciation expense.
If after all is said and done, you have a net positive number, you pay taxes at your ordinary tax rate. On the other hand, if you have a tax loss, it can offset earned income (W-2 income) further reducing your adjusted taxable income.
Just about EVERYTHING is deductable on rentals! - Posted by David
Posted by David on March 03, 2000 at 19:53:28:
All labor, materials, repairs, taxes, insurance, utilities, advertising, transportation, legal fees, etc.
Not deductable, YOUR labor, principle, and capital expenses to be amortized(depreciated over time).
I’m not an attorney even though I play one on TV.
David
Re: Tell me my Attorney is wrong…Please!!! - Posted by Bill
Posted by Bill on March 03, 2000 at 19:28:34:
Attorneys are attorneys and accountants are accountants. Talk with a an accountant. But I can tell you,as tons of other people can.that all INVESTMENT property has associated depreciation,fix up cost/maintenance,etc. tax advantages…you’re not limited to just one property. You CAN’T get these advantages off your personal property,except in cases where you live in say a 4 unit building,then roughly you’d have 3/4 investment advantage. Again,accountants are fairly cheap to use…use them.
Ok, since you said please . . . HE’S WRONG! - Posted by William Bronchick
Posted by William Bronchick on March 03, 2000 at 18:29:23:
Of course interest and property taxes are deductible on your rentals. Check Schedule “E” of your 1040.
Re: Tell me my Attorney is wrong…Please!!! - Posted by Chris
Posted by Chris on March 03, 2000 at 18:05:27:
Good reason to ask “Do you own any investment property?” when picking these professionals.
You may want to go over to the IRS website and order the free information they have.
basic premise - Posted by RR Smith
Posted by RR Smith on March 03, 2000 at 17:25:31:
and the best answer is…(drum roll) Tim from (hotlanta). Jeff I have noting to add about taxes (cough, cough) but, I have a problem with your basic REI thinking. Tax benifits of RE should be consided LAST WHEN INVESTING. The deal you make should stand on it’s own WITHOUT CONSIDERING the additional money you get back because of tax breaks… As a Robert Allen student, tax bennies were always considered as icing on the cake.
Whaaaaaaaaaat? - Posted by The Baze
Posted by The Baze on March 03, 2000 at 16:15:59:
Holy smokes, that means the 16 returns for real esate investors I’ve done this year are all wrong. Guess I’ll be looking for a love letter from the Internal Ripoff Service.
Tom Bazley, soon to be CPA (if all goes well on the May exam)
…wonder where HE graduated from… [nt] - Posted by SusanL.–FL
Posted by SusanL.–FL on March 03, 2000 at 15:01:55:
nt.
Find someone else to talk to about taxes!!! - Posted by Tim (Atlanta)
Posted by Tim (Atlanta) on March 03, 2000 at 14:35:43:
He has no idea what he has said. Of course, if he is referring to deductible on your Schedule A, then he is correct. Only your primary residence and one other vacation home may be deducted on Schedule A.
But rental properties go on Schedule E. All expenses associated with rental properties are listed. That includes mortgage interest, taxes, repairs, mileage, … etc. All of these expenses offset the rental income that you get from the property. You pay taxes on the amount of money you made on the property, that is rent minus expenses minus depreciation.
Talk to a qualified CPA.
Re: Tell me my Attorney is wrong…Please!!! - Posted by Bill Taylor
Posted by Bill Taylor on March 03, 2000 at 14:31:39:
How do you spell MALPRACTICE!!!
He’s WAY wrong… - Posted by JHyre in Ohio
Posted by JHyre in Ohio on March 03, 2000 at 14:01:02:
and obviously not a tax attorney. Interest and taxes are CLEARLY and INDISPUTABLY deductible when it comes to investment property. Use someone else for tax advice.
John Hyre, Tax Attorney
Re: Tell me my Attorney is wrong…Please!!! - Posted by Skip (CA)
Posted by Skip (CA) on March 03, 2000 at 13:41:24:
Jeff:
If he’s correct, my CPA and I have been doing it all
wrong. Do as Dee suggests and contact a CPA. Just my .02.
Skip
Re: Tell me my Attorney is wrong…Please!!! - Posted by d.henderson
Posted by d.henderson on March 03, 2000 at 13:33:25:
Unless he is a tax attorney, I would check with a CPA.
Dee-Texas
Re: Technically, he’s right…but… - Posted by Mark (SDCA)
Posted by Mark (SDCA) on March 06, 2000 at 12:32:26:
The tax loss is a little more complicated than simply “it can offset earned income”. It depends on what your adjusted gross income is, how much time you spend as a real estate investor during the year and how large the real estate loss is… Talk to your accountant on this one…
Mark