What's everybody doing this weekend? My wife and I are going to adopt a dog and I am going to an A's game.

 

I'm going to finish up kitchen/dining room. Just finished texturing and will start on primer this evening...paint this weekend and hook up all the outlets and switches.

My nightmare is just about over...

But then the inlaws show up from Pa. on Sunday evening for a week...so maybe it's just beginning?

 

Taxes. 8/15 is the deadline for an extension. Procrastination is my specialty. I'm going to have to pay a penalty. I had to figure out how to handle the taxes on the house I bought for my son. It's his house. He's paying the bills. But my name is the only one on the mortgage and the title.

Legally, it's my second home. Otherwise it's his. So, do I include his payments as rent on a rental? It's under $10k a year, so is it a gift and I take the full deduction? It's a mess.

 

Hey Chet,
My accountant told me they extended it this year two 6 months, so the deadline is Oct 15th.

 

Chet,

legally, you have to live in the house for 2 weeks a year to claim it as a second home...easy enough to get around though...but...if you claim rent as income from your son, then it's considered rental property and you can't claim it as a second home.

But, good news is that if you call it a rental property...you get deductions and depreciation out the yang, which far out weighs the income.

I'd suggest calling it a rental, then claim all deductions (i/e all the closing costs are deductable on a rental...not just the points, some things need to amotorize over certain periods of time.

I/e, when I converted my home in fremont to a rental, even though I got 21K a year in rental income, I was still able (due to depreciation), claim about 18K in loss...

Suggest you get a TurboTax Premier...The first year I did my taxes with a rental, took me three or four days, printing froms, doing calcs, etc...next year I got TT Premier, and was done in 2 hours...best 75 bucks I spend every year.

If you don't want to hassle with it being a rental...(for the future when/if you sell it), then keep it as a second home, take standard deductions on it, and just sign the intrest (I for get the form number) over to your son so he can deduct the intrest on his taxes...what this does is say if you sell it in 2 or 3 years, then you can avoid capital gains tax on it up to 250K (currently, IIRC assuming you make a profit), otherwise as a rental property you have to pay some of the loss back to Uncle Sam, plus pay gains...unless you buy another property with the money...again, assuming you get more for it than what you paid.

Again, I suggest getting TT and spending a 1/2 day doing it both ways (2nd home-rental) and see how you fare.

 

PS...I can see if you wouldn't want to disclose your income/etc...but if you wanted to round up all your paperwork and bring your laptop down, we could knock it all out in a few hours.

 

And the GOOD NEWS is: Primer/sealer is done...wall paint goes on this evening!!!!

 

Hey Mike, are the walls going to be pink?

 

No sir....

She picked out some tan shades...ofcourse she had to make it tough on me, she wants the ceiling one color hsade and the walls a different

Just more work...oh well

 

Mike,

I appreciate the offer. I really do. The tricky bit is that PITI is less than $10k for this house. As a result, I can gift it to my son with no penalty. I'm working through several scenarios as '07 was only a few months. The challenge is that this year establishes the rules until my son can qualify for his own mortgage in a few years.

Two weeks? Visiting my grandson? Each year? I have no issues with that until Evan becomes a teenager.

 

Not a problem Chet, it's just that my thing is to get as much back from Uncle Sam as I'm legally entitled too...I'm striving for a 1% tax bracket...ofcourse with my income now days, that's not too hard