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BK-CPA
BK-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 933
Experience:  Owner of a CPA firm
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I have several questions. 1. My mom owns

Customer Question

Hello,
I have several questions.
1. My mom owns a building with four apartments, she resides in one, one is vacant, and two are rented out. she has spent over $10,000 in repairs, but, she does not have any receipts, how does she claim these maintenance expenses on tax return?
2. Does the building qualify for depreciation value? According to tax documents, the building estimated value for 2014 was $550,000, but, for 2015, the estimated value is $324,000.
3. I cosigned on a college student loan for my son, however, I have been making the payments, because he was still in school, and I still am making the payments, due to him being unemployed. Am I authorized to claim this loan on my taxes? Or does he file, although he is unemployed and I am proving him with 100% of his living expenses.
Thank you very much
Johane
Submitted: 7 months ago.
Category: Tax
Expert:  BK-CPA replied 7 months ago.
Hello and thank you for your question. 1) She can claim them, but would generally lose them if the IRS chooses to audit. She should try to locate bank and credit card statements showing the amounts paid. Cancelled checks from the bank, if available, are better. If she paid in cash and didn't save a receipt, there's little she can do to document the expenses. 2) Any asset being used in a business generally qualifies to be depreciated under Sections 167 & 168 of the Tax Code. The basis for depreciation generally is what was paid to acquire a property. The property's fair value isn't usually relevant, but if someone converts personal use property to property being used in a trade or business, the basis for depreciation becomes the lesser of the taxpayer's basis in the asset or the assets fair market value at the time the property is converted to business use. 3) Generally, yes, you can deduct the interest on these student loan payments under Section 221 of the Tax Code. You should be personally liable (you said you cosigned) and the loan should have been taken at a time when you could claim your son as a dependent. See Section 221 for the specifics (it's not too tough of a read): https://www.law.cornell.edu/uscode/text/26/221 I hope this is helpful.
Expert:  BK-CPA replied 7 months ago.
PS - For Q1) You mom would deduct these on Schedule E of Form 1040 to the extent they are applicable to the rental properties. If 3/4 of the building is rented or she is actively attempting to rent it, then she can generally deduct 3/4 of the expenses, but she may be able to deduct 100% of the expenses if they were specifically for the rented property. Example: She pays to get one of her rental units painted. 100% of that cost is deductible because it was specifically for a rental unit and was not for the unit she is renting.
Expert:  BK-CPA replied 7 months ago.
"Your" - typo.
Expert:  BK-CPA replied 7 months ago.
Sorry for these typos... long day! The last sentence should read: "100% of that cost is deductible because it was specifically for a rental unit and was not for the unit she is using for personal purposes."
Expert:  BK-CPA replied 7 months ago.
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