Guidance on Tax Filing and Mortgage Considerations

Miami, Florida
Tax, SDIRAs & Cost Segregation
1yFollow

Guidance on Tax Filing and Mortgage Considerations

Jordan Hamilton
Miami, FL · Member since 2018 · 66 posts · 33 votes

Hi everybody!

I purchased my primary residence in Tennessee in March 2024. However, due to my wife's pregnancy, we decided it would be best to move back to Miami to be closer to family in June 2024.

Recently, I conducted a cost segregation study on the property shortly after converting to a STR (converted June 1 2024), and I want to ensure I file my taxes correctly and legally given this change in circumstances. My understanding is that typically, a homeowner must live in the property for at least a year before converting it to a rental. However, exceptions may be made for extenuating circumstances like mine.

Additionally, I have a great relationship with my lender and secured favorable terms on my current loan. When I approach them for financing on my next property, I want to avoid raising any red flags due to my relocation and the status of my Tennessee home via how I file taxes in 2024 (i.e STR instead of my primary as it was originally intended).

Would it make sense to abort filing the cost seg for this Property in 2024 and list it as my primary to avoid issues on my next purchase? The idea is to not "wake sleeping dogs" and while at the same time not having issue on my next purchase.

Could you provide guidance on how to navigate this situation from both a tax and mortgage perspective so I won't have issues getting my next property? Please let me know if you need any additional details.

Thank you so much!

Jordan

1Reply
27 views

Most Popular Reply

Raymond J. RodriguesBusiness Member
Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
1y

Welcome back to Miami @Jordan Hamilton! 

Interesting case you have here from a mortgage standpoint. The fact that you moved from your primary residence three months after purchasing may seem a bit strange to your current lender, especially with you potentially having it classified as an investment property in the same calendar year. Of course, it was due to extenuating circumstances which neither you nor the lender had control of. Depending on the way their company operates, you filing your property as an investment on your taxes may be considered an issue for them depending on how stringent they are. Other lenders as a new relationship may not care as much because they were not the ones that originally funded your loan and would not yet deem you as a risk. Occupancy fraud is not something lenders are too fond of, even if you went about things in an understandable way. Having the property on your tax returns will help to wipe the mortgage expense with proposed rental income, making it easier to qualify for your next primary residence purchase. If not, you may have to qualify with the full mortgage payment against your debt to income ratio, including the new home that you are looking to purchase.

From a tax standpoint, you may want to speak with @Natalie Kolodij. 

[email protected]619-456-8311
Helm Mortgage Corp.5127 Reviews
WebsiteView Page
2Reply
See this reply in the discussion

4 Replies

Jump to latestLatest
  • Raymond J. RodriguesBusiness Member
    Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
    1y

    Welcome back to Miami @Jordan Hamilton! 

    Interesting case you have here from a mortgage standpoint. The fact that you moved from your primary residence three months after purchasing may seem a bit strange to your current lender, especially with you potentially having it classified as an investment property in the same calendar year. Of course, it was due to extenuating circumstances which neither you nor the lender had control of. Depending on the way their company operates, you filing your property as an investment on your taxes may be considered an issue for them depending on how stringent they are. Other lenders as a new relationship may not care as much because they were not the ones that originally funded your loan and would not yet deem you as a risk. Occupancy fraud is not something lenders are too fond of, even if you went about things in an understandable way. Having the property on your tax returns will help to wipe the mortgage expense with proposed rental income, making it easier to qualify for your next primary residence purchase. If not, you may have to qualify with the full mortgage payment against your debt to income ratio, including the new home that you are looking to purchase.

    From a tax standpoint, you may want to speak with @Natalie Kolodij. 

    [email protected]619-456-8311
    Helm Mortgage Corp.5127 Reviews
    WebsiteView Page
    2Reply
    • Jordan Hamilton
      OP
      Miami, FL · Member since 2018 · 66 posts · 33 votes
      1y

      @Raymond J. Rodrigues 

      Thank you for your detailed response, sir! I really appreciate you taking the time to answer my question.

      I agree that qualifying for my next property could definitely be an issue. That's exactly what I want to avoid. Currently, I have an LLC that operates as a management company, which collects all the income from my two short-term rental properties. However, on my tax returns, I dont break down the income by property or specify how much each one generates, just that my LLC earns revenue from management.

      Regarding a cost segregation study, how does it appear on a tax return? Does it clearly indicate that a specific address is a short-term rental, making it visible to my next mortgage lender?


      Given what I've said, what's the most creative / cleanest scenario here as a mortgage lender when I go to get my next home?

      0Reply
  • Raymond J. RodriguesBusiness Member
    Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
    1y

    @Jordan Hamilton it’s a lot of information to type out here to be honest and depends on one’s situation. Shoot me a text or email and we can chat further. Infos in my signature. 

    [email protected]619-456-8311
    Helm Mortgage Corp.5127 Reviews
    WebsiteView Page
    1Reply
  • Sean GrahamBusiness Member
    Investor , CPA · Detroit, MI · Member since 2016 · 583 posts · 248 votes
    1y
    Quote from @Jordan Hamilton:

    Hi everybody!

    I purchased my primary residence in Tennessee in March 2024. However, due to my wife's pregnancy, we decided it would be best to move back to Miami to be closer to family in June 2024.

    Recently, I conducted a cost segregation study on the property shortly after converting to a STR (converted June 1 2024), and I want to ensure I file my taxes correctly and legally given this change in circumstances. My understanding is that typically, a homeowner must live in the property for at least a year before converting it to a rental. However, exceptions may be made for extenuating circumstances like mine.

    Additionally, I have a great relationship with my lender and secured favorable terms on my current loan. When I approach them for financing on my next property, I want to avoid raising any red flags due to my relocation and the status of my Tennessee home via how I file taxes in 2024 (i.e STR instead of my primary as it was originally intended).

    Would it make sense to abort filing the cost seg for this Property in 2024 and list it as my primary to avoid issues on my next purchase? The idea is to not "wake sleeping dogs" and while at the same time not having issue on my next purchase.

    Could you provide guidance on how to navigate this situation from both a tax and mortgage perspective so I won't have issues getting my next property? Please let me know if you need any additional details.

    Thank you so much!

    Jordan

    I’d recommend talking to your lender. It’s either an j beaten property on your taxes or it’s not. Whether you do a cost segregation study or not is irrelevant 

    Maven Cost Segregation Tax Advisors554 Reviews
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free