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First Tax season as a Landlord

Mr.Montreal

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Jul 25, 2017
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I apologize for bumping this thread up again but I have another question.
I own a rental property with a JV 50/50 partner from which gross income is about $36k per year. After deductible joint expenses (interest payments, taxes, repairs etc.) we are left with ~$8k. Now, we have not deducted our personal expenses yet (i.e motor vehicle expense). My partner barely has any personal deductible expenses while I have quite a bit. How do you deal with this?

-If we use CCA to depreciate our property for that remaining $8k, we are deferring taxes that I could deduct with my personal expenses and not pay.
-If we split the remaining 8k in half and I deduct my expenses, my partner will have to pay taxes for his half.

My partner obviously wants to depreciate the property so that he will pay no taxes this year.

What do you normally do?
 

Thomas Beyer

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Aug 30, 2007
Messages
13,881
I apologize for bumping this thread up again but I have another question.
I own a rental property with a JV 50/50 partner from which gross income is about $36k per year. After deductible joint expenses (interest payments, taxes, repairs etc.) we are left with ~$8k. Now, we have not deducted our personal expenses yet (i.e motor vehicle expense). My partner barely has any personal deductible expenses while I have quite a bit. How do you deal with this?

-If we use CCA to depreciate our property for that remaining $8k, we are deferring taxes that I could deduct with my personal expenses and not pay.
-If we split the remaining 8k in half and I deduct my expenses, my partner will have to pay taxes for his half.

My partner obviously wants to depreciate the property so that he will pay no taxes this year.

What do you normally do?

The expert decides how to allocate CCA. Presumably that is you.

So you can do either.

If you have expenses that pertain to the JV, for example travel there and car or meal expenses then the JV should pay for that and lower taxable income.

You shouldn’t really deduct expenses not pertaining to the JV or property anyway. What would those be, for example?

Personally I would then use appropriate CCA to bring taxable income to 0 and if you still feel you have expenses over and above the JV costs then you can’t deduct them unless you have other employment or investment income.


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com
 
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