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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 14406
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I have been looking for another rental property. Thought I

Customer Question

I have been looking for another rental property. Thought I found something.
Spend $2000.00 architecture plans , septic. Little to find. I will not be able to build what I want.
Where do I deduct this cost? $2000.00
What about my stay in the hotel. This property was 1 hour from my house.
FOr 3 nights I stayed in hotel over 3 month’s time.
Can I deduct $2000 on SCHEDUEL E. under what LINE?
2) Mortgage interest on 2nd home. Vacation home is deductable, plus real estate taxes. Plus insurance. Please specify about vacation homes.
Submitted: 1 year ago.
Category: Finance
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Hello, Emma thanks for requesting me directly

MyVirtualCPA :

First thing - the vacation home. You can deduct the interest and taxes on your second home, but if you have more than one vacation home you can only deduct the cost of one

MyVirtualCPA :

You deduct on the same line of schedule A as your primary residence

MyVirtualCPA :

The travel expenses and expenses of investing in additional properties is not deductible

MyVirtualCPA :

You cannot deduct on schedule E the cost of searching for additional properties. If you were to find a property then those costs would be added to the basis, but if theres no new property then there is no basis.

Expert:  Megan C replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Megan C replied 1 year ago.
Emma,

Thanks again for requesting me directly. Please review my response. If you have questions, please reply below. Otherwise, please rate as "excellent" so that I may receive credit for assisting you today. Thanks again for using JustAnswer.com
Customer: replied 1 year ago.
I have a time share.
2 weeks in Aruba. Condo fee total $1500.00
Super expensive. Can I deduct condo fee on
Schedule A. And add $1500.00 to my primary
Home's tax bill?
What do I do with condo fee expense.

2) question. I though I could deduct $2000.00
Expense towards new property.
Under schedule E. development expense.
We were in process of buying.
Expert:  Megan C replied 1 year ago.
Thank you for your follow up. Unfortunately, your condo fee/time share is not tax deductible. The condo fee cannot be deducted anywhere on your tax return.

If you are in the process of buying a property, the cost you incur to find/develop the property would be added to the basis. It is not a currently deductible expense.

Please let me know if you need anything additional. IF not, please rate as "excellent' so that I may receive credit for assisting you today.
Customer: replied 1 year ago.
I am disappointed $2000
Expense. Search for new property is disallowed.
I hired professional. But land didn't purk.

2) If I sold second home.
Sale I need to report form 4979
Where do I report sale of second home.
Am I allowed deduction.
$500,000 married deduction.
Every 2 years
Expert:  Megan C replied 1 year ago.
I'm sorry about the $2,000 expense as well. I wish I had better news for you there.

If you sell a second home, there is no exclusion. That's only for your primary residence. You would not report the sale on 4979 you would report on schedule D. Loss is disallowed, and gain is taxed as capital gain.

Please let me know if you need anything additional. If not, please rate as "excellent" so that I may receive credit for assisting you today.
Customer: replied 1 year ago.
On schedule D. I report shares.
In description. I write second home 100%
Example:XXXXX
Expert:  Megan C replied 1 year ago.
Fill out on form 8949 part II the description of property would be the addresses - then fill in the rest about the sale. Then carry that amount to schedule D in the proper place in part II

Please let me know if you need anything additional. If not, please rate as "excellent' so that I may receive credit for assisting you today.
Customer: replied 1 year ago.

 


Can you give me a link to Form 8949. I am using turbo tax.


Can’t seem to pull the form. I See refrence to the form on schedule D.


I never used form 8949 when I sold stock?


Loss on sale of sale of 2nd home is recognized.


I can subtracted again Capital gain.


OR take 3,000 annual loss.

Expert:  Megan C replied 1 year ago.
Thank you for your follow up. Here's a link to form 8949 CLICK HERE.

You should use form 8949 when you sell stock, but it was prob a prior year where form 8949 was not required.

Also, you can NOT recognize the loss on the sale of a second/vacation home. It is a personal use asset and therefore a loss is disallowed. Sorry if this is inconvenient for you.

Please let me know if I can be of further assistance. If not, please rate as "Excellent" so that I may receive credit for assisting you today.
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 14406
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 3 other Finance Specialists are ready to help you
Customer: replied 1 year ago.

 


I apologize for my lack of knowledge. Do see the form 8949 from your link.


Can’t seem to retrieve from TurboTax.


I am confused Schedule D and from 8949 look so similar.


If I sell a long term stock or short term, it needs to be reported to 8949 form?


Lastly, Gain on personal home $500,000 every two years is allowed.


But loss on sale of personal residence is disallowed.

Expert:  Megan C replied 1 year ago.
I do not know how to retrieve the form in TurboTax...it should automatically fill itself out when you enter information in. I'm not certain, as I do not know much about TurboTax. Form 8949 feeds form Schedule D, they are used together. If you file form 8949 then those amounts go to schedule D.

Yes, if you sell long term or short term stock it would go on form 8949 as well.

Loss on sale of personal residence, second residence, vacation home, etc is all disallowed. You cannot exclude the gain except for on your primary residence, not your second home or vacation home.

Please let me know if you need anything additional. If not, please rate my response as "excellent" so that I may receive credit for assisting you today

Thanks again
Expert:  Megan C replied 1 year ago.
Thanks for allowing me the opportunity to help you. Please let me know if I can be of any further assistance to you in this matter. I really enjoyed working with you – please feel free to request me again when you come back to ask another question. Simply enter "MyVirtualCPA" in the subject of your question Thanks again for being a JustAnswer customer
Customer: replied 11 months ago.

 


Enjoy receiving qualified advice from you.


Returning client


 


What is the difference between investment interest and mortgage interest?


Investment interest on Schedule A?


2nd question: I have 2 contractor working for me yearly I pay them 21K


They buys materials for repairs and do minor repairs.


I send them 1099.


How do I deduct them on schedule E. How do I deduct therelabor work.


Materials I understand I have receipts. Labor under subheading repairs?


Each one does so many little jobs, change locks, turn boiler, and paint a window.


15-16 small repairs per year per property.


 


 

Expert:  Megan C replied 11 months ago.
Thanks, Emma for your follow up. Investment interest is interest you pay on money that you have invested. Some people borrow money to invest, so it would be the interest on those loans. Mortgage interest is the interest on a mortgage secured by a piece of real property.

For the contractors, you would include their labor in repairs. You don't have to put it in labor. You can just put the entire amount in repairs.

Please let me know if you have any additional questions. If not, please rate as "excellent" so that I may receive credit for assisting you today.
Customer: replied 11 months ago.


Since, I have so many little repairs, change locks, paint, etc.


Do I have to keep any track record of repairs.


For audit I am concern. My contractors labor I list as repairs.


No summary what the repairs are.


 


Labor change boiler. Boiler I will depreciate. Insulation work is repair.


How do I keep track of labor. My contractor gives me one set price.


I don't want to depreciate items. Boiler I assume is a 5 year deprecation.


 


Plus interest income I would deduct on Schedule A. LINE?

Expert:  Megan C replied 11 months ago.
Emma,

You will not be deducting interest income. You only deduct interest expense. None of your rental property expenses will go on schedule A. Everything is on schedule e.

Labor to change a boiler is part of the cost of the boiler - it's added to the basis. Labor to repair the boiler is a repair But, if the labor is for an item that is depreciated, the labor cost is also depreciated.

Yes, you need to keep a log of repairs in the event you are audited. Receipts and canceled checks showing you paid your contractors is a good idea as well.

Thanks

Megan
Customer: replied 11 months ago.


Megan, change lights, change locks, repaint, a lot of minute jobs.


I pay both workers labor cost. I am overwhelmed with number of tiny jobs. List them all as repairs. And have a log not report the log on income tax.


I meant Interest Expense I deduct on Schedule A.


Summarize what is interest expense.


Does it have a minimum base 2 % of AGI.


Line.


I invested time researching about certain property, Didn't buy it.


Invested close to 7 k. Bad deal in the end.


How do I deduct this expense. No P&S was signed

Expert:  Megan C replied 11 months ago.
Thanks, Emma for your reply. Interest expense deductible on schedule A would be for interest that you borrowed for investments...not real estate, but like stocks and bonds and mutual funds. If you borrowed money to buy that type of thing, then that interest is deductible.

You would not deduct the loss for researching and not buying a property. Investment expenses include the following:

  • Fees for investment counsel and advice, including subscriptions to financial publications
  • IRA or Keogh custodial fees, if paid by cash outside the account
  • Software or online services you use to manage your investments
  • Safe deposit box rent, if you use the box to store certificates or investment-related documents
  • Transportation to your broker’s or investment adviser’s office
  • Attorney, accounting or clerical costs necessary to produce or collect taxable income
  • Charges for automatic investment services and dividend reinvestment plans
  • Costs to replace lost security certificates


Thanks and let me know if you have further questions. If not, please rate as "excellent" so that I may receive credit for assisting you today.
Customer: replied 11 months ago.

I spend 5 K searching for a property. Architecture plans etc.


Example Cape Cod.


6 month later bough a property in RI. different time of property.


3 family. Can I deduct previous expenses, cape cod?

Expert:  Megan C replied 11 months ago.
Thank you for your follow up. No, you cannot deduct the cost of the cape cod investment. If you would have purchased the property, then the amount would have been added to the basis.

Please let me know if you need anything else. If not, please rate this response as "excellent" so that I can receive further credit for assisting you today.

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