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Richard
Richard, Tax Attorney
Category: Tax
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Experience:  29 years of experience as a tax, real estate, and business attorney.
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I own a coop unit in Seattle WA 1 year into a refinanced 15

Customer Question

I own a coop unit in Seattle WA 1 year into a refinanced 15 year mortgage. I will be moving in March to CT. I'd like to sublet my Seattle residence and rent in Seattle. But i don't want to lose the mortgage interest deduction. Is there a similar deduction or way to avoid losing that deduction after I move?
Submitted: 1 year ago.
Category: Tax
Expert:  Richard replied 1 year ago.
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.


Good evening. Once you move and start leasing the property in Seattle, it will become rental property. You will have to report the rental income as income and you will get to deduct your mortgage interest, your property taxes, fees, maintenance, etc. In addition, you can depreciate the property and this will be a non-cash outlay deduction to also offset your rental income. This income and deductions will be reported on Schedule E to be attached to your Form 1040.





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Customer: replied 1 year ago.

In general, will the tax implications of renting be worse or better than owning? (In general, if i make the same, will my federal taxes go up because i'm renting the place out vs. owning?)


 


I will pay about 17000 in mortgage interest, 9000 in dues, 1000 assessment, 1700 property tax next year. Not sure what the depreciation would be.


 


I'll earn about 22,200 from rent. So i'll be 6,500 "in the hole" on the rental for the year. My trip east could be temporary so i want to keep the place for one year even though i'll lose money over the year.

Expert:  Richard replied 1 year ago.
Thanks for following up. You have to separate the WA property from what you do in CT. With regard to WA, if you cannot rent it for enough to break even, you probably would be better off selling it than renting it. But, unless your co-op has substantially depreciated in value, the fair market rental value should be sufficient to cover your expenses plus expenses so there is no loss to you. It may be that you should seek a high rental rate.

With regard to CT, if you rent, you get no deductions; if you own, given the low mortgage rates, you can get the deduction and generally your payment plus insurance and taxes are still less than the rent you would pay.
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 46162
Experience: 29 years of experience as a tax, real estate, and business attorney.
Richard and 6 other Tax Specialists are ready to help you
Expert:  Richard replied 1 year ago.
Thanks so much for the positive rating and the bonus! I appreciate the opportunity to serve you! If I can be of assistance to you in the future, just look me up and I will be happy to help!

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