All Forum Posts by: Gagan P.

Thanks @Adam Rasmussen

I figured out the capitalization part, it was the next field down. Brings me to another question. Is depreciation required each year? I have a $2,700 expense for a pool liner, for example, which I'd rather just add to capital cost of the building instead of depreciating it.

This is a personal 1040, with Schedule E for rental. No K-1 or partnership involved.

As far as "will be determined at the personal level", can you explain? Does that mean if personal income is higher than the rental loss then there's nothing to carry over? Or is it possible to carry the entire loss over? At $15k, I'd rather have the loss available for a later year, or ideally add it to the capital cost of the house.

Thanks again :)

Do rental losses need to be used in the same year?

Example: $15k in personal income but also $12k in real estate losses.

If there's enough deductions to not pay tax on the $15k, then what happens to the $12k rental losses?

I've searched it and apparently Form 8582 is the form to be used, but TurboTax doesn't suggest or mention it once. Can these be carried forward or capitalized?

Second question. How do we capitalize expenses (whether the above losses, or things such as replacing an AC or flooring)? Again, TurboTax is useless here.

Thanks :)

 I would tend to agree, but SB13 starts off by saying (in Paragraph 1):

https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB13

"The Planning and Zoning Law authorizes a local agency, by ordinance, or, if a local agency has not adopted an ordinance, by ministerial approval, to provide for the creation of accessory dwelling units in single-family and multifamily residential zones in accordance with specified standards and conditions. Existing law requires any ordinance adopted by a local agency to comply with certain criteria, including that it require accessory dwelling units to be either attached to, or located within, the proposed or existing primary dwelling or detached if located within the same lot, and that it does not exceed a specified amount of total area of floor space."
This implies that a local agency would be a local code agency/government body, not a state-owned corporation.

Also, California Code in another piece of legislation does have a definition:

https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=GOV§ionNum=54951
"As used in this chapter, “local agency” means a county, city, whether general law or chartered, city and county, town, school district, municipal corporation, district, political subdivision, or any board, commission or agency thereof, or other local public agency."

Municipal corporation, or "local" public agency.

I'll add to that and suggest maybe not even in that order. 

 See Bolded section. PG&E is not a "local agency, special district, or water corporation". Looks like the loophole was intended in the Bill.

It should be in your lease. Typically though 1-2 months, unless the property doesn't rent for say 3 months. Usually you're required to mitigate losses, as well as have a spelled out break fee.

I'd say two months would be a safe bet, but one at least.

Just checked this after getting here and being told by the host that it's cancelled.

Too bad.

Canada also doesn't have flow-through corporations such as an S-Corp designation.

A corp WILL help, to an extent, for asset protection, and there are lenders who may allow title in the corp name (though I'm not sure if they'll allow it immediately in a corp name or once the corp has been around a few years).

What you have to watch for:
1) As it isn't a flow-through entity, you can't offset losses against personal income.

2) Corporate taxes will come into play, or dividend taxes (this is different than in the US)

3) Insurance will be in the corp name (though not an issue usually)

4) If you're paying expenses, you'll need to use the corp account or cash, or a corp card (or small business card just for the corporation). You do NOT want to mix expense accounts.

As Roy said, sit down with an account who has experience with corporations and rental properties, and make sure it's the same type you're looking at (multifam, Single fam, etc).

Local lawyer may be helpful, but if it's within the same province then any lawyer should be fine, as you'd be getting title insurance anyway so most lawyers don't do all the searches they once use to.

Just gotta make sure lawyer gets all utilities transferred/cleared.

Bigger concern, if you intend to finance it, would be to ensure its legality as a lender won't take the income for the second unit into account if you're planning on getting a loan.

I would speak with neighbours who've been in the area for years, as well as find old zoning regulations. If you're purchasing it and the seller is who said this, you could put the onus on the seller as a condition in the Agreement of Purchase and Sale.

As for your question, Anand, you need to contact the city to do this. Water they may or may not do, but the other two are possible. Just to clarify, this is a DUPLEX, not simply something that has a basement apartment, correct?

Typical conditions for water are that the plumbing must be separate for both units (this applies whether duplex or legal basement). If it's a true duplex then this won't be an issue and is already done.

Electricity and gas: Same thing a bit easier for these, but some providers require proof of legality of second unit. But same thing, you'd want to ensure no breakers are shared between units.