trof
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Tue Jul-17-07 09:30 AM
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Any IRS and/or real estate/mortgage cognoscenti here? |
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If someone unrelated to you pays a debt that you owe, would you have to show this as 'income' for tax purposes?
More specifically, if someone makes my mortgage payments for a year or more, is that income for me? Thanks.
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trof
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Tue Jul-17-07 09:39 AM
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1. I may have found answer. |
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"Assignment of income. Income received by an agent for you is income you constructively received in the year the agent received it. If you agree by contract that a third party is to receive income for you, you must include the amount in your income when the party receives it." -IRS website
So I guess if someone makes my mortgage payments to a third party (the mortgage holder) I'd have to declare it as income.
I'm trying to figure a way for a friend to rent his vacant house without having to show additional income.
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rug
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Tue Jul-17-07 09:44 AM
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trof
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Tue Jul-17-07 09:52 AM
Response to Reply #2 |
5. Nope, they're Obama supporters. |
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Retired on fixed income. It's kinda complicated. My s-i-l wants to rent their house but showing the income messes up their tax situation.
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pitohui
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Tue Jul-17-07 09:51 AM
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3. oh yeah it isn't even a gray area, it's definitely income |
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used to be you could rent your house for less than 2 weeks out of the year w.out declaring it but could be this exception is long gone, best to do is poke around the irs.gov website and see what you find i guess
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Hosnon
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Tue Jul-17-07 10:05 AM
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7. Rule of Thumb: If you have to ask, it is considered income. NT. |
freethought
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Tue Jul-17-07 09:52 AM
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4. It might be. An accountant would be a person to talk to. |
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It may depend on how much the total paid out comes to. On one side it may be considered income because someone else was paying your debt obligations. A more "adventurous" approach would be that the monies paid to this mortgage could be considered a "gift". There are provisions that allow someone to receive cash gifts tax-free in a given year but there are limits to the amounts. Above a certain amount and you will likely have to report it on your tax returns.
Given that the person in unrelated to you this could complicate things. My advice would be that you seek a professional opinion. It may worth it to talk to a CPA for a half-hour.
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trof
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Tue Jul-17-07 09:55 AM
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6. They will talk to CPA. 'Gift' might work though. |
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Hadn't thought of that. Thanks
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Gormy Cuss
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Tue Jul-17-07 11:03 AM
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9. Gift limit now is around 12K a year. n/t |
freethought
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Tue Jul-17-07 11:16 AM
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A great may hinge on interpretation of what a "gift" is under tax code. Still, it's a good idea to talk to a CPA.
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Gormy Cuss
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Tue Jul-17-07 11:19 AM
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11. I wasn't recommending it, just providing info. n/t |
Throwing Stones
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Tue Jul-17-07 10:18 AM
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8. Is this something your S-I-L intends to do long term? |
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If so, it might be better to set up the property as an income property, which would then be eligible for business deductions. If it's a short term fix, the gift idea might work, but if long term, ask a CPA about the advantages of putting the property in a corporation or LLC.
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judaspriestess
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Tue Jul-17-07 12:15 PM
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12. how would anyone find out? |
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