All Forum Posts by: Brian Henry

@Scott Morris - It is in Citrus Springs (Citrus county), FL

We have a vacant lot in FL (Citrus Springs) and have been paying property tax for years, while the value of the land has decreased over the years.  We got a mailer offering to buy it and we are ready to just get rid of it.  Any red flags or things to consider before signing the offer and sending it back in?  They pay cash and cover closing fees.

@Michael Plaks - I am definitely looking to handle this correctly and will take your advice and seek some professional help this year to make sure I get it right.  Definitely appreciate the sage advice.

@Ashish Acharya  & @Michael Plaks - It is only my second home and while my Son works a little, I had saved the money for his college housing expenses already and am using those funds to cover his part of the housing costs (which is still less than what he'd be paying to live on campus).  And I do claim his as a dependent still.

So as I understand, I will have to take all of the qualified expenses and only use 2/3 of them on Schedule E and then be able to deduct 1/3 of the mortgage interest on Schedule A.

What about the costs of acquiring the property?  We bought the house with the long term intent of a buy and hold rental (that our Son would live in for his last 3 to 3.5 years of school) even though it would also be treated as a 2nd home until our Son graduates.  We traveled up to Idaho to look at properties and then all of the acquisition/closing costs and the expenses in repairs and getting it ready for renting.  

We bought it in April and did not have it occupied until August.  Do I treat everything as a 1/3 home and 2/3 rental right from the start?

Do you know if this type of scenario is spelled out in an IRS form?  I have done my own tax returns for the last few years with TurboTax and would like to going forward but am wondering if this year may be too complicated for me to tackle on my own.

Thanks @Michael Plaks.  That makes sense......I understand it will just be a bit more complex until after he graduates and it becomes 100% rental.

@Ashish Acharya - Thanks for the insights.....it does seem complicated.  My understanding is that I could treat 1/3 of the house as a residence (the part my son lives in as his primary residence for the year).....and for that part I could deduct 1/3 of the mortgage interest and not record any income from my Son (which is really from me redirecting money I would have paid the college or a landlord for his rent).  I could then treat the remaining 2/3 of the house as a rental....reporting the income and depreciating 2/3 of the house and writing off 2/3 of the expenses?

I have not run the numbers to really know whether this is better than just treating the whole thing as a rental.......It would seem a lot cleaner and simpler to make it 100% rental

I bought a property last April that my son and 2 college student roommates are living in.  Getting ready to do taxes for the 1st time since purchasing.  Do I treat the property as 1/3 second home that my son lives in and 2/3 rental?  Or just treat as a 100% rental and include my son's rent payments as income?  Do I have an option?  If so, is there an advantage to doing it one way or the other?  Thanks in advance for any advice.

I'll be sure to share any tips I pick up along the way

Has anyone bought a home out of state for their child and roommates to live in?  This is our 1st venture into a "rental property".  We are putting our son on the loan as he will be the part-owner and occupying the property.  I have a number of questions about the right way to do this and things to be thinking about...would love to hear from someone else who has already done the same.  Thanks!

Hi BP,

I am about to buy a SFR that my son will live in while he is in college the next 3 years. We are having him be a co-owner as he will make it owner occupied and will have 2 roommates living with him and paying rent. Do I need to have a formal lawyer approved document to spell out the co-ownership agreement? My wife and I are funding the down payment and will pay his living expenses (we had already saved for those expenses in 529 and ED-IRA), so essentially, we are taking care of 100% of the expenses and funding. Do we need to spell that out in an agreement?

Also, we do intend to have our son be the property manager for the house and would pay him for that service with plans that he could treat that as earned income and could invest that in his Roth-IRA...any issues there I need to consider?

My frugality keeps me from running out and talking with a lawyer/cpa ...can I handle these with simple online templates?  Thanks for the advice!