Interesting Tax problem (anybody know the answer?)

[Joshua Locke]

I am not an accountant but I about ready to hire one as I now own my 3rd SFH. Last tax year I only had 1 SFH and I learned a lot about what's taxable and what's not. The basics of deducting my itemized expenses and only counting the cash flow as taxable is fairly easy to understand. The problem arises with my 2 new properties... they are model homes that I purchased from the building company. The builder rents from me to show prospective buyers their handiwork while they build up the neighborhood and then when the neighborhood is finished being built I can either sell or continue renting since I own the property. It was a great option for turnkey rentals for an out of country investor (I am military overseas).

So here is my problem: one of the benefits of my contract with the builder is they reimburse me all Taxes, HOA fees, and Insurance costs when I provide proof of payment. Normally I would itemize these expenses and write them off on my taxes. I do have the receipts for them and everything is in my name, but I am not sure I can write them off since I am being compensated for them. Thoughts anyone?

[Natalie Kolodij]

These are a wash. 

He should 1099 you for the income he paid you for rents and taxes, Hoa, ect total Report the TOTAL he gives you as income

Then you can deduct the actual expenses you paid below.