Expenses associated with a wraparound mortgage

[Angie Menegay]

For tax filing, where would expenses associated with a wraparound mortgage be reported? On Schedule A? Some examples would be interest paid to the underlying lender, note processing fees etc.

Thanks,
Angie

[Bill Gulley]

Don't know what Steve the tax guy will suggest, but I'd deduct my expenses before I arrived at my income, so the income claimed would already be adjusted before it ever hit any tax form. I also look at it as to the amounts in the big picture, while not trying to evade any tax, but avoiding tax, if the amounts are disallowed, that arisies from an audit, if there is an audit, then it will be a mistake and tax may be due as well as any penalty. If your expense is $62, what king of impact does that make on the big picture? Probably not much on the personal side.

What you could is assign the servicing to a business entity and pass the payments through, that will be easier to account for admin expenses, so long as it's a related business activity, see your tax guy. :)