Discussion:Rental property - Renter unable to pay
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Discussion Forum Index --> Tax Questions --> Rental property - Renter unable to pay
Dan's Tax Service (talk|edits) said: | 17 March 2009 |
| Client has a rental property occupied by the same renter for several years. Renter has cancer and was unable to pay rent during 2008. My client has maintained the property in the same fashion she has in previous years (expenses); and absorbed all the costs. | |
| 17 March 2009 | |
| That was very nice of your client
TexCPA 22:34, 16 March 2009 (CDT) | |
Dan's Tax Service (talk|edits) said: | 17 March 2009 |
| Resub of above:
Client has a rental property occupied by the same renter for several years. Income and expenses have always been reported on Sch E. The renter has cancer and has been unable to pay rent during 2008; consequently, no income to report. However, my client is maintaining the property and realizing the same expenses. No action has been taken to remove the renter - and, probably none will be taken. Without the home, the renter would have no one to take care of him or a place to live. Questions: Should I report the property on Sch E without income; or, drop it for this year? The renter is truly dependent upon my client for housing, etc; and, could probably be claimed as her dependent? If so, I would drop the Sch E for this year and claim him as a dependent. | |
| 17 March 2009 | |
| The dependent would not work unless either related or living together. If this is really just a good tenant and not a relative or friend, I think I would show the E with no income. Especially if she is hoping to recoup the rent in the future. If no expectation of ever getting paid might be able to claim interest and taxes on a if only one other mortgage. | |
| 17 March 2009 | |
| This is a personal choice of the owner. It is difficult to believe that there is no government agency in your area that does not have assistance for this renter. Has the client contacted hospice? or any other agency? taxea | |
Dan's Tax Service (talk|edits) said: | 21 March 2009 |
| Thanks for input. This is a bonafide rental (she has four others). I can assure you that her intent is definitely to make $$$. While he was in good health he, as a friend, occasionally assisted her with chores. Like TexCPA said above, "she is very nice" and not about to throw him to the government agencies, which, I must add, has laden with deep cuts in human services funding and are about to furlough/lay off personnel.
She knows that I intendeded to ask for your comments. I mentioned TexCPA's to her and she smiled. I'll share your thoughts with her, discuss the situation further, and she can make a decision. I'd appreciate anything more you have to add. (Sorry about monitoring this more closely - had internet problems plus a return that had me too deep into the forest. Happily, I've found my way to the clearing again) | |
| 21 March 2009 | |
| Any way to treat the interest and taxes as a 2nd home this year? I think foregoing actions to evict, capitalizing the rental with interest into a new lease or something that shows effort to make money jeopardizes a Sched E. Your client is noble; would hate for her to do such a good deed then get with a tax bill for doing it. | |
Dan's Tax Service (talk|edits) said: | 21 March 2009 |
| Thanks. I'll share your comments. Last year, we excluded her beach home from the Sch E rentals because it was bringing in insignificant income vs expenses. This would make subject rental her 3d home. Based upon your comments, I'm planning to delete my note (to accompany the return) that she sent renters an eviction notice on another rental (which I thought was beneficial becuase of the process that landlords are required to adhere to). | |
| 22 March 2009 | |
| I didn't see anyone mention an actual eviction. I think we were all trying to find a way to assist with the finances. Any chance for qualifying him as a dependent? taxea | |
Dan's Tax Service (talk|edits) said: | 22 March 2009 |
| The "dependent" thing is too questionable/risky. Try this one - Can she claim 2008 rental income if she receives payment before April 15, 2009? | |
| 23 March 2009 | |
| Ah but, if he can't pay anything how is she going to get rental income? taxea | |
