NLIC.org

Willie Said:

Is rental income loss tax deductible?

We Answered:

You need to read IRS pub 527 to get a handle on this.

1. Your mortgage payment is not an expense--the interest paid is.
2. Instead of principal, you get depreciation on the building (roughly 3-4%).
3. You need to rent at fair market value.
4. The depreciation invariably puts you negative.
5. The passive loss rules kick in. If you actively manage the property (while you don't do the plumbing, you are the one who calls the plumber if a pipe breaks) and your income isn't too high, you can deduct up to $25,000 against other income. The rest is postponed on a form 8582 until you can either use it or you sell the property.

Clifton Said:

My home taxes and insurance is paid thru our escrow...is this included on our 1098?

We Answered:

Property taxes actually paid during 2007 are deductible. Paying escrow is not paying the tax--it's a savings account.

Regular insurance is not deductible.
PMI if you purchased your home in 2007 may be.

Francisco Said:

Tax question on rent paid while being displaced by a fire.?

We Answered:

As far as the state, you cannot double dip. You didn't pay the rent, the insurance company did. You can't deduct it again.

I'm glad your insurance company paid the rent. If they hadn't, you wouldn't be able to deduct the rent on you 1040 tax return and the money adds up quickly.

The IRS publication 547 has the following information:
Insurance payments for living expenses. You do not reduce your casualty loss by insurance payments you receive to cover living expenses in either of the following situations.
You lose the use of your main home because of a casualty.

Government authorities do not allow you access to your main home because of a casualty or threat of one.


Inclusion in income. If these insurance payments are more than the temporary increase in your living expenses, you must include the excess in your income. Report this amount on Form 1040, line 21. However, if the casualty occurs in a federally declared disaster area, none of the insurance payments are taxable. See Qualified disaster relief payments , later, under Disaster Area Losses.

A temporary increase in your living expenses is the difference between the actual living expenses you and your family incurred during the period you could not use your home and your normal living expenses for that period. Actual living expenses are the reasonable and necessary expenses incurred because of the loss of your main home. Generally, these expenses include the amounts you pay for the following.
Renting suitable housing.

Transportation.

Food.

Utilities.

Miscellaneous services.

Normal living expenses consist of these same expenses that you would have incurred but did not because of the casualty or the threat of one.

Example.

As a result of a fire, you vacated your apartment for a month and moved to a motel. You normally pay $525 a month for rent. None was charged for the month the apartment was vacated. Your motel rent for this month was $1,200. You normally pay $200 a month for food. Your food expenses for the month you lived in the motel were $400. You received $1,100 from your insurance company to cover your living expenses. You determine the payment you must include in income as follows.

1) Insurance payment for living expenses $1,100
2) Actual expenses during the month you are unable to use your home because of the fire $1,600
3) Normal living expenses 725
4) Temporary increase in
living expenses: Subtract line 3
from line 2 875
5) Amount of payment includible in income: Subtract line 4 from line 1 $ 225


Tax year of inclusion. You include the taxable part of the insurance payment in income for the year you regain the use of your main home or, if later, for the year you receive the taxable part of the insurance payment.

Janet Said:

tax deductions on 1st home?

We Answered:

Mortgage interests, property taxes, and mortgage insurance are deductible if you itemized deductions instead of taking standard deduction. Now if you are married, the standard deduction is hard to beat ($10,900 for 2008 tax year). If you're single filer, you may have a chance.

Itemized deductions are not refundable, it merely reduces your taxable income.

Jeanne Said:

monthly service charge deduction?

We Answered:

No, it is not deductible. Sorry.

Good luck. :0)

Annette Said:

i had bought a house for 95,k and want to refi?

We Answered:

when you refi you pay fees which would be like 5-6k but with a low fico score like that you may have to pay more. If you can consolidate and you're in a financial bind , DO IT! then dont use your credit cards if you're not really good with payments etc. Just realize that if you cant pay your new payment your house can foreclose. be careful...sounds like youre maxxing yourself out in all areas. refi'g if you have a personality of spending what you have available might get you further in debt....you'll have open credit to charge.

Christopher Said:

If selling a home on a lease/purchase & non-refundable downpayment, continuing my mortgage,what tax charges?

We Answered:

No guarantees on anything. You can establish a time limit up to 5 years. Not sure of the other questions but those 2 I did.