dsheth82 Posted April 15, 2008 Report Share Posted April 15, 2008 I have a return in which client owns two house/two mortgages. One is used by them, and second one is rented in March 2007. Current tenant will be moving out in this month, and client is not sure if they would rent it again. I need help on how to complete Sch E. PLEASE! Quote Link to comment Share on other sites More sharing options...
LindaB Posted April 15, 2008 Report Share Posted April 15, 2008 I have a return in which client owns two house/two mortgages. One is used by them, and second one is rented in March 2007. Current tenant will be moving out in this month, and client is not sure if they would rent it again. I need help on how to complete Sch E. PLEASE! I'm not sure what your question is... Sounds like 10 months of rent for 2007, depreciation for that period, mortgage interest, etc. Just because they might not rent it again after this month doesn't change that. Quote Link to comment Share on other sites More sharing options...
OldJack Posted April 15, 2008 Report Share Posted April 15, 2008 >>depreciation for that period<< Depreciation does not stop just because there is no renter or rent income. It only stops when the asset ceases to be rental property as a result of disposition. Not sure about tomorrow is not disposition. Quote Link to comment Share on other sites More sharing options...
dsheth82 Posted April 15, 2008 Author Report Share Posted April 15, 2008 Sorry for being not clear.. Let's me try again.. Currently, Client owns two houses. One house is being used as a primary residence, and second was given for rent on March 5, 2007. Current tenant will move out during April 08. Client is not sure if they would be renting it out or not after that point. How do i report the rental income and the mortgage interest and real estate taxes paid on the rental property? This is what i have done. Please tell me if i am doing it correctly or not. Added Schedule E, page 1 Reported Income & related expenses as mentioned above Did the depreciation (as allowed after taking the expenses - mortgage interest & real estate taxes) --------------------- Net Loss/Income = $ 0.00 Do i need to give Form 4562 & 8582 to Client? Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted April 15, 2008 Report Share Posted April 15, 2008 Yes and depreciation schedule. Quote Link to comment Share on other sites More sharing options...
neilbrink Posted April 15, 2008 Report Share Posted April 15, 2008 Did the depreciation (as allowed after taking the expenses - mortgage interest & real estate taxes) --------------------- Net Loss/Income = $ 0.00 Do i need to give Form 4562 & 8582 to Client? Quote Link to comment Share on other sites More sharing options...
dsheth82 Posted April 15, 2008 Author Report Share Posted April 15, 2008 Thank you. Yes, the net income before depreciation came out to be around $500. Total depreciation was $2866, but only allowed to use $500, and other will be carryover. Per your responses, it looks like i have done it correctly. Let's see what happens. Thank you for all your help, and sorry for being not so clear at first (client comes in yesterday (14th) with so much of a backup -- as a first timer it freaked me out). :-) Quote Link to comment Share on other sites More sharing options...
LindaB Posted April 15, 2008 Report Share Posted April 15, 2008 >>depreciation for that period<< Depreciation does not stop just because there is no renter or rent income. It only stops when the asset ceases to be rental property as a result of disposition. Not sure about tomorrow is not disposition. I just meant for 2007--they can worry about 2008 next year. Quote Link to comment Share on other sites More sharing options...
LindaB Posted April 15, 2008 Report Share Posted April 15, 2008 Thank you. Yes, the net income before depreciation came out to be around $500. Total depreciation was $2866, but only allowed to use $500, and other will be carryover. :-) Why can they not use the total depreciation and show a loss? Quote Link to comment Share on other sites More sharing options...
jklcpa Posted April 15, 2008 Report Share Posted April 15, 2008 It sounds like the OP is entering it as vacation home & the deprec is being limited to the income after other expenses were applied. I think for the rental home, I'd allocate the first 2 months of mort int & re tax to Sch A. Then for the remaining 10 mos after being put into service as rental, the balance of int & re tax to Sch E. If the rental home was 100% rental after being put into service, it should allow the depreciation to create a loss. And that loss should be deductible if the modified AGI on the 8582 is > $150K. Quote Link to comment Share on other sites More sharing options...
dsheth82 Posted April 15, 2008 Author Report Share Posted April 15, 2008 Return is done and given to Client. I hope i did it right. I went ahead and counted as vacation home, so depreciation was limited. Thanks! Quote Link to comment Share on other sites More sharing options...
Daune/CA Posted April 15, 2008 Report Share Posted April 15, 2008 Why was it done as a "vacation home", nothing in what you said would indicate it being so used? Was it not rented until March because they could not get someone to rent it until then, or was it being used as a personal residence until then? This still would not be a "vacation home", maybe depr should be for entire year if it was being offered for rent before March. Did they not "actively participate" in the rental of the house? Looks to me that an amendment may be desireable. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted April 15, 2008 Report Share Posted April 15, 2008 Duane, I agree with you. Unfortunately, the OP might be gone from the forum until next season. I'm going to send dsheth82 an email or PM & ask that he/she revisit this subject here. Quote Link to comment Share on other sites More sharing options...
dsheth82 Posted April 16, 2008 Author Report Share Posted April 16, 2008 Thank you for the PM. Per my knowledge the house was used for first two months as personal. I will dig in deeper on this issue this week, and file amendment if necessary. I am not sure the following matters but... Current tenant will be moving out this month, and they are not planning to rent it out (as client told me). ------------------------------------ Now ? for the next year: I have a BS in accounting, and studying for CPA. Passed one, three more to go. This was the first year of the business. I really really missed having someone to advice on the issues i am not aware such as above. Is it possible to get someone to provide an advice for next year if i get stuck or need help on any issues related to taxes? (not through forum or email - phone) Of course, i am not expecting it for free. May be pay per hour charge/incident charge/or combination of both. Of course, i am not asking for an hour a day. May be just 15 to 20 mins when ever needed. Please advice if this would be a good idea. Quote Link to comment Share on other sites More sharing options...
joanmcq Posted April 16, 2008 Report Share Posted April 16, 2008 That's a pretty basic issue though; how to fill out a Schedule E. The asset is personal for the 1st 2 months and then converted to business. Interest and RE taxes would be prorated for the 2 months/10months and the rest of the expenses, such as utilities ect taken in the whole during the rental period. It is a CONVERTED asset and does not fall under the vacation home rules. This is what the posters have been trying to tell you. It helps if you ask the right questions, like 'do the vacation home rules apply here?'. And of course you need to give them the 8582 and the 4952 and every other form that is applicable to the return. And if something too complicated for you comes in late in the year, put it on extension until you know you have it right. Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted April 16, 2008 Report Share Posted April 16, 2008 Is it possible to get someone to provide an advice for next year if i get stuck or need help on any issues related to taxes? (not through forum or email - phone) Of course, i am not expecting it for free. May be pay per hour charge/incident charge/or combination of both. Of course, i am not asking for an hour a day. May be just 15 to 20 mins when ever needed. Please advice if this would be a good idea. You might want to specify where you are -at least the state - so that if someone offers to help you, they will be helpful on the state returns you do the most of as well as federal. Quote Link to comment Share on other sites More sharing options...
dsheth82 Posted April 17, 2008 Author Report Share Posted April 17, 2008 You might want to specify where you are -at least the state - so that if someone offers to help you, they will be helpful on the state returns you do the most of as well as federal. Thank you for the suggestion. I will keep that in mind for the next year. It's for Illinois. The return was rejected due to SS number of dependent not being correct. Thank you. Quote Link to comment Share on other sites More sharing options...
grandmabee Posted April 17, 2008 Report Share Posted April 17, 2008 Thank you for the suggestion. I will keep that in mind for the next year. It's for Illinois. The return was rejected due to SS number of dependent not being correct. Thank you. This was kind of a scary thread reading thru this Quote Link to comment Share on other sites More sharing options...
joelgilb Posted April 18, 2008 Report Share Posted April 18, 2008 This was kind of a scary thread reading thru this More than a little scary....... Did we just go through tax season or Halloween? <==== from Illinois here, soon to be Nevada though. YAAAAAAA no more State returns... YAAAAA NO MORE WINTER!!!! oooops summers will be murder, oh well POOL TIME!!!! Quote Link to comment Share on other sites More sharing options...
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