l3vi <ad...[at]madfrogproductions.com> wrote:

- quote -

You can deduct expenses (such as mortgage interest) for the
second house on your Schedule E, not on your Schedule A. If
your expenses exceed the rental income AND you meet the
criteria for active involvement in the rental property, you
may be able to take a loss on the rental property. However,
if your income is too high, you can only use expenses to
offset rental income, and your CPA was essentially correct.

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Stuart Bronstein <spamt...[at]lexregia.com> wrote:

- quote -

I guess there is a first time for everything. :-)

- quote -

I'm under the impression that the CPA did explain it
properly. But, it probably wasn't the answer that the poster
wanted to hear.

- quote -

Of course, that limit is phased out as AGI increases over
$100,000 which I assume is the case here.

- quote -

It sounds to me like the CPA and the poster don't
communicate well with each other, but I'll withhold judgment
as to whether one side is more to blame than the other. :-)

MTW

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MTW <mtwingcpa[at]yahoo.com> wrote:
- quote -

First of all, OP called it a second "home" not a rental
property. That's not definitive, but I've seldom if ever
heard people call a property a home if it's a rental.

But if that were the reason, the CPA should have explained
it. That's not a hard concept to understand.

But in addition to that, the passive loss rules don't apply
(up to a limit) to rental real estate of the owner "actively
participates" in its management.

I suppose there is a small chance the CPA is right. But if
he is and either wouldn't or couldn't explain it so the OP
could understand it, he needs a new CPA anyway.

Stu

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The 2nd lot is next to our 1st home, so after some research
we found since the lot is next to our first home lot, then
we can slide that lot under an extension of types of our 1st
home and write off the property. However, before we got the
lot we did buy the 2nd home in SC, and as of this year we
are renting it all year around. I have spent some more time
on the phone with our CPA, and since we rent it out we have
no deductions because the property does not have any gains,
and we are only able to take losses on the property if it
gains positive revenue, however we can not take the money
that we pay in interest to the property unless we plan to
kick the renters out, which is less of a write off then
renting it, however I have to find a way to convert it into
a positive cash flow, but all that seams a bit of BS to me,
because as of this point it sounds like I will not get
anything out of paying the mortgage with or without renters,
and it makes it sound liking buying 1, 2, or more properties
to help convert my investing, will not curve the IRS 47%
chunk they took out of our income last year, and looks like
they will do this year.

We are looking for a new CPA, but we need one that knows
ebiz, and is in Virginia. It's a slow process to find a CPA
that does not just run the numbers, but gets out and looks
at your biz model and tells you how you should setup your
biz and life to reduces taxes.

Thanks,
Levi

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- quote -

I'd consider the (empty?) lot next to the first home as part
of that home's property. Even if not, it isn't a "second
home".

Seth

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L K Williams wrote:
- quote -

The third? he said the SC house was the 2nd home (personal
residence), and I see why, since he's paying interest also
on a lot next door to his primary residence. It would
appear that that lot does not have a house on it and has
been amalgamated with the land on which the primary sets.

However if that lot is not part and parcel at this time of
the primary lot and home, it might be investment property,
right?

ChEAr$,
Harlan

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L K Williams <la...[at]loxinfo.co.th> wrote:

- quote -

I'll second that! :-)

I'm under the impression that the so-called "2nd home" is
actually a rental property and the CPA advised the poster on
the implications of the passive loss rules.

MTW

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l3vi <ad...[at]madfrogproductions.com> wrote:

- quote -

If it is your only second home mortgage interest is
deductible on Schedule A (subject to the $1,000,000
acquisition indebtedness and $100,000 equity indebtedness
limits). If this is your 3rd (or greater home) there is no
additional Schedule A deduction for interest and there is no
option of adding the interest paid to your basis.

- quote -

For every $100 you pay in mortgage interest you save a max
of $35 in federal income taxes. If that was your only reason
for purchasing the property then you are losing money.

- quote -

How many times will you allow him to be wrong before you
find another tax preparer?

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Bob" <bobinsfo[at]yahoo.com> wrote:
- quote -

Whoa!! Hold on! What's wrong with the CPA's advice? If
you read the OP statement carefully, you will see that this
house may not the second home but the third! OP is already
deducting interest on two properties. We need more facts to
be able to tell what is going on here but the position of
the CPA is not, on the surface, outrageous.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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"l3vi" <admin[at]madfrogproductions.com> wrote:

- quote -

Can CPAs be sued for malpractice? Run, don't walk, away
from this idiot and find a tax accountant who knows what
he/she is talking about!

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We live in VA, however have a 2nd home in SC. Our CPA will
not allow us to deduct the interest paid on the home in SC
agents our personal income in the area of federal taxes.

He tells us that we can only apply it to the home itself,
and acquire the deductions when we sell it.

I find this odd, especially when I can write-off my first
home, as well as the other lot that I own next to our first
home lot(that lot was acquired after the 2nd home), however
my 2nd home can not be applied to my income to help reduce
taxes which is why I bought it in the first place.

We have this feeling that our CPA is wrong, because we have
found things in the past that we could write-off and he did
not know about it or something.

Thanks for any help into this!

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