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Real Estate Tax Question Two sisters Inherited home in 2009…

Real Estate Tax Question Two sisters...
Real Estate Tax Question
Two sisters Inherited home in 2009 California
House was in probate a few years after mother’s death in 09.
House was put into service as a rental in 2012 but not yet claimed on taxes
One disabled sister lives in the home. She was unable to claim inheritance due to potentially losing Social Security benefits.
Other sister legally owns home 100% but allows disabled sister to live there.
$600.00 per month rent is being subtracted from her deferred equity in the home, which is close to fair value.
Should/can we claim $7200 in received rents annually although the income is deferred until the house is sold within a year or two?
Can prior years’ rental expenses, interest etc. be included now?
We are concerned about jeopardizing the disabled sister’s SS income. She lived with her mom until her mom passed away.
This is a sticky situation with a relative and seemingly free, but we also need the write offs. Please advise.
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Answered in 3 minutes by:
3/27/2017
Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7,439
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Hello, my name is***** goal is to give you a complete & accurate answer. I am working on your request now & I will respond as soon as possible.

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So are you saying the sister that's occupying the home is on SSI rather than Social Security Disability Income?

You can't report rental income you don't receive.

Does anyone else live in the house with the disabled sister?

Steve G.

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Customer reply replied 1 year ago
she is on SSI and no one else lives with her.
Customer reply replied 1 year ago
Are coming back?

Sorry, when you weren't here I took a break for dinner.

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The only thing you can claim are the real estate taxes and mortgage interest.

Even if it was rental property & you are charging her "equity" in the property, she can't be in effect renting the property to herself.

Steve G.

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Customer reply replied 1 year ago
Ok. Me too. Can the 2nd home deductions be taken then and for how many years? The house has never been listed on our tax returns.
Customer reply replied 1 year ago
Ok. For how many years? The house has never been listed on our taxes. Was acquired in 2012.

Yes they can.

You would need to file Form 1040-X for each open year.

2012 is a closed year.

2013 closes on April 15, 2017

2014 closes on April 15, 2018

2015 closes on April 15, 2019.

Steve G.

Stephen G.
Stephen G., Sr Income Tax Expert
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Satisfied Customers: 7,439
Experience: Extensive Experience with Tax, Financial & Estate Issues
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Customer reply replied 1 year ago
Thank you very much. 5 Stars.
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Stephen G.
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