Oh, hey, can I pick the internet’s collective brain? Does anyone know the tax implications of owning half a house in another state? Because Paul’s sister is apparently just going to continue living in their mom’s house for free, but charging us half for repairs, and TRUST ME THAT I TOTALLY AGREE WITH WHATEVER YOU ARE GOING TO SAY ABOUT THAT AS LONG AS IT’S EXTREMELY NEGATIVE AND USES WORDS LIKE “CRAZY” AND “STUPID,” BUT I HAVE TRIED TO GET PAUL TO HANDLE THIS AND HE IS DECLINING TO DO SO, SO WE HAVE TO DEAL WITH THINGS AS THEY ARE RATHER THAN AS THEY SHOULD BE.
I know when I do OUR taxes, there are several house-related things, but it’s a house in our own state and we own it and we don’t share it with someone else (well, except the bank). What about this other house, which we don’t live in and share ownership of? There’s no mortgage on it.
I was going to do a google search, but I don’t even know how to phrase that question so that it comes up with something useful. “Crazy sister living in house that’s half mine in other state taxes” doesn’t seem like it would work.
Sorry I’m not more help. I blame Google.
I used to to the books for my old landlord/boss who owned several properties with his brother & sister. It was all in the same state though so I don’t know if your situation is different.
The tax assessor would send a bill to the address listed as the owner on the title, which was my boss, even though he was listed with his siblings. Then my boss paid the taxes & I would invoice his brother and sister for their share. The town/state doesn’t really care WHO pays them but if neither of you do they can put a lien on the property.
When you don’t have a mortgage there’s no escrow account the money goes into with your monthly payment so you need to have a chunk of cash hanging around to pay it (usually due it two installments over a year’s time). I would *think* paying those taxes would also affect your tax returns in some way, but that’s where my knowledge ends.
Also: STUPID. CRAZY. EXTREMELY NEGATIVE. Sounds a lot like my mom’s sister.
Becky- YES, I ran into trouble with Google too! “My husband won’t tell his sister that they should sell the house, so she’s just going to live there for free and how do I record that on my taxes?” got me NOTHING!
Stupid, crazy, and other negative things. Sheesh!
I have absolutely zero advice except to say it sounds like you are going to be legally on the hook for property taxes, and I would recommend talking to an accountant. Which will cost you more money. For a house you do not want to own. Awesome.
Well you can write off the property taxes. I only know that because our property taxes are so astronomical that I look forward to that write off yearly. I would imagine they would not let you split that write off, so maybe sister needs to be the one paying the taxes as her form of “rent?” Although, that sounds entirely too logical for this particular sister.
Crazy, weird, and totally stupid.
Wish I had any advice whatsoever but I have no idea. I am just… baffled. What is it with men and their sisters? (And I AM a sister, and would never do something like that to my brother.) (GAH.)
I’m sorry, but I stumbled on the whole she’s charging you half for repairs. SHE’S CHARGING YOU HALF FOR REPAIRS? IN A HOUSE THAT SHE’S LIVING IN FOR FREE?
Good night, nurse.
It sounds like you’re asking a slightly different question than who is responsible for the property taxes, which is “does this have any implications for when I file MY federal and state income tax returns?” And my answer, as a non-tax-expert lawyer person, is maybe. You can deduct the property taxes you pay on your 1040 Schedule A, but I’m not sure how it works if you split that with a co-owner. If you were renting out the home, you’d have to report the rental income, too- but with this sister just lolling about, it sounds like that’s not a problem. And if and when you sell the house, you’ll likely have capital gains taxes on it, but it sounds like THAT isn’t happening this year at least.
Well, as long as you agree with me…
HOLY COW TOTALLY NUTS.
Much as I love asking the Internetz for advice as well, I agree that this is absolutely an ask-a-professional question. It will cost more money, but might save you a huge back-tax bill – and hassle – in the future. Hie thee to an accountant – and good luck!
I believe you should re-phrase the question: “Why the eff do we own half of this house?” She either needs to buy his half or sell outright. Why does death make family crazy?
My question is, CAN you write off the property taxes? I thought you could only do that for a house that was your primary residence. I am MOST CERTAINLY not a tax expert and not the one to ask, but I thought that in general these tax breaks for housing were aimed at helping people pay for houses they actually live in, and therefore people who own vacation homes, etc., do not benefit from the same types of write-offs that they get for their primary residences. But I DON’T KNOW. And I have a headache just thinking about it.
I agree that you should talk to a CPA. When you call around to find one, just ask what his/her rate is for an hour’s consultation. You most likely won’t need that much time to get your answers. It’s also possible you can get the answers over the phone without paying at all.
Having said that, my understanding of the tax implications is that they don’t enter into the picture until the house is sold. You should keep receipts for any major improvements to the house, but you can’t technically write off expenses for roofing or painting, which are considered maintenance expenses. Any allowable expenses would go towards reducing your “cost basis,” but this only comes into play when you actually sell the house and realize capital gains on it.
p.s. My understanding was that you were asking about IRS taxes, not property taxes.
WOW. And I thought only someone in my family was crazy enough to try to pull that one off. My grandma (who isn’t doing well) is leaving her house to her two daughters (one is my mom) equally, but told my mom that “Sarah would like to just live there after I’m gone, but she can’t pay you rent or anything.” My mom answered “I’m sure she would, but maybe I’d like to sell it and have some cash to pay down my own mortgage/take a vacation/pay medical bills/etc.” My grandma’s response, “Well, that’s not really thinking of your sister, is it?”
Yes, you can write off the real estate taxes to the extent you pay (50%, i assume) on Schedule A on your 1040, though prob not your state return, if you even have a state return (WTG Swistle, I literally have no clue where you live, except it is somewhere with winter)
As for the maintenance, you can’t write that off unless it’s a rental property.You don’t get to write off maintenance of your own home either. You DO get to include any improvements in the cost basis of the house, to help with capital gains, but that only applies when you sell. You CAN file a Schedule E with no rent income, I guess, but i’ve never done it. Schedule E is the only way to write off repairs, etc.
Email me for more info if you want
Other than consulting professionals, and possibly threatening to no longer serve as family tax preparer, I got nothin’ but sympathy. When my mom bought a share of my grandmother’s house many years ago, they got into a dispute about fees and taxes. Both ended up going to lawyers and they didn’t speak for months. My verification word is “fixida,” which I’m hoping is a good omen!
If it’s a rental you can write off all rental related expenses- including depreciation, which is a BIG one. Check with a tax person though. Or, better yet, tell your husband to sack up and inform his sister he is selling the house. If she wants to continue living there, she can buy him out.
Have you ever tried googling “allexperts”? There are all these different catagories and you can review previously posed questions or pose a question and get it answered. I’ve been very pleased w/ the info I’ve received on our Disney itinerary, used auto advice, and info on refinancing our mortgage-try it, it’s painless!
You can’t write off repairs or depreciation unless it’s a rental property. What you should be doing, honestly, is charging her rent, because you’d get a lot more tax breaks, probably enough to make up for the cost of half (WTF) of the repairs.
This is … this is so crazy. She SHOULD be paying you rent to live there. You own half of it. She should also be buying Paul out if she wants to live there. I know you know these things, but this is NUTS. NUTS. OMFG.
It’s been approximately 1 million years since I did anything related to individual income taxes so I will not give advice other than to echo everyone else’s suggestion that you seek professional advice. I am having a nagging feeling that since SIL only owns 1/2 the house but is living there rent free it might be arguable that she is receiving “income” of some kind for the portion of the rent she is not paying for income tax purposes. Might ask the professional about that in so far as if it’s true, it might provide leverage for you.
Also sorry about the family crazy!
My three cents:
Your accountant will probably concur that you need to settle the property, legally. My advice is to sell it to your beyond-selfish-entitled relative for as little as you possibly bear.
If there is no mortgage, what does a bank have to do with this?
If you are paying half the repairs, shouldn’t you be able to stay there from time to time as well?
p.s. ‘fuka’ was your word verification word…odd one.
What the holy hell?
I’m sorry you married into a family of crazies…
I think you need a depreciation schedual which will be included in your federal tax return. This can then be written off on your fed taxes, at least that is what I do with my property that I do not live in or collect rent on.
But yes, since you are loosing money it’s going to need to be depreciated.
Oh goody, a question I can answer. This is not technically a rental property because you aren’t getting income from it. I would not put it on Sch E. I would write off the property taxes you pay on Sch A, you can do that for as many houses as you actually pay the tax for.
You won’t depreciate the house, or take expenses for repairs, on your federal return because it’s not a rental. There is no income, and there will be no income in future.
I can answer more questions if you like, I do taxes for a living. If you decide to give sister your share of the house, there may be some federal tax consequences to that as well. I would need to know what state you’re in to be more specific about state rules, but in general, since you’re not getting income from the other state, you don’t need to file a return for that state.