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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4177
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi, i am new to the US but have been working here for about

Customer Question

Hi, i am new to the US but have been working here for about a year now. I want to buy a house cash , deposit checks from my company into my account in order to show a bank statement to secure the deal...but some people are telling me that it might raise red flags and risk auditing..I don't have a credit history yet so I can't apply for a loan. will irs question me How I bought a house cash if I have only been working in the US for one year?
Submitted: 11 months ago.
Category: Tax
Expert:  Lane replied 11 months ago.

Lane :

Depending on how much you made in 2012, you may not have even made enough to have to file.........and if most of the money has been made in THIS year, then you won't file a return (for 2013 taxes) until (by) April of 2014

Lane :

As long as report income as you made it (and this is PROFIT, your business can always deduct its ordinary and necessary expenses before arriving at the number on which tax must be paid) THE FOLLOWING YEAR at tax time

JACUSTOMER-41fgp5tn- :

have only been working since the beginning of 2013 though, and have collected food stamps and tax returns because of my kids. ..I can prove I've been working with my company via checks paid out , certification, etc. though...

Lane :

Then you are FINE ... You just need to be sure to report next year, when it's time) ... You're business is not even in the system yet

Lane :

still with me?

JACUSTOMER-41fgp5tn- :

yes

JACUSTOMER-41fgp5tn- :

is property bought tax deductible in some way?

Lane :

Again, if you earned the money in 2013, you will not file taxes on that until april of 2014

Lane :

Yes it is

JACUSTOMER-41fgp5tn- :

how so

Lane :

property AND state and local sales taxes ... al

Lane :

Use schedule A when filing your taxes

JACUSTOMER-41fgp5tn- :

yes but can i get a tax break by buying property

Lane :

Thats right

JACUSTOMER-41fgp5tn- :

how

Lane :

File your taxes and deduct it on schedule A

JACUSTOMER-41fgp5tn- :

how much of it would be deductible for example

Lane :

ALL of your property is deductible, when you itemize and use schedule C

Lane :

sorry schedule A

Lane :

You'll include it with your taxes in 2014

JACUSTOMER-41fgp5tn- :

it seems to only have a clause for deducting property taxes

JACUSTOMER-41fgp5tn- :

not property itself

Lane :

no, of course not

JACUSTOMER-41fgp5tn- :

thats what im asking

JACUSTOMER-41fgp5tn- :

so there is no way to get some sort of tax break by buying property?

Lane :

When you sell the property, you will pay (if you sell for a profit) for a gain, that's where you'll see the investment in the house not included

JACUSTOMER-41fgp5tn- :

so for example if i buy property for 100k for example

JACUSTOMER-41fgp5tn- :

sorry less

JACUSTOMER-41fgp5tn- :

what percentage are the taxes

Lane :

Sorry, not directly....(1) Property taxes are deductible (2) Mortgage interest is deductible and (3) as I said when you sell, if this is an investment preoperty, you only pay taxes on the gain NOT the amount you invested

Lane :

IF this is going to be your prinary residence, the the gain is actually excluded from intaxes ... a HUGE break

Lane :

BUT no deduction for the purchase itself, not directly

JACUSTOMER-41fgp5tn- :

ok

Lane :

There are no taxes for just BUYING the house, you, just invested mone into it

JACUSTOMER-41fgp5tn- :

even if i were to buy it for example say under the company as a company office?

Lane :

OK, the proportion of the house that you use for office space IS deductible ... lets say you use 25% of the space

JACUSTOMER-41fgp5tn- :

ok

Lane :
then you can depreciate, 25%, deduct 25 of the interest on your mnortgage, and of course deduct all the other expenses like phone computer, whatever ... oh and you can deduct 25% of utilities as well, under this scenario
JACUSTOMER-41fgp5tn- :

hm interesting

JACUSTOMER-41fgp5tn- :

so say i buy a property for 60k ,

JACUSTOMER-41fgp5tn- :

what would the taxes be on that

Lane :

there are no taxes for BUYING a property

Lane :

Here's an excellent article about all of the tax deductions that CAN come from home ownership:https://turbotax.intuit.com/tax-tools/tax-tips/Home-Ownership/Home-Ownership-Tax-Deductions/INF12005.html

Lane :

So to recap ... (1) there are lots of deductions that can come from home ownership, (2) You'll see the tax benefit of the purchase when you sell for a gain and can have up to 500,000 EXCLUDED from income (3) If you use a portion of the home for business that allows you to depreciate part of the home (take a business deduction for wear and tear) (3) you can deduct a part of utilities for that business as well

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4177
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 4 other Tax Specialists are ready to help you

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