2nd home in Fl

[Jonster]

We purchased a condo in FL in 2019 where our child lives full time. At that time, we didn’t have a will and put her on the deed as an owner. The HOA does not allow rental or just 1 room, it has to be the whole unit. Are we better off leaving her on as an owner or removing her from the deed and allow a roommate and do a lease for both?

[rschule1]

Hi there:  Sorry but this question is for a real estate attorney not a tax accountant.  Sorry to not be able to help.  

[Cindy4]

Hi @Jonster !

From a tax standpoint, if you are renting the unit you would claim the rental income, and any related expenses on a schedule E attached to your form 1040.  If you end up showing a profit, you would owe tax on the profit.  If you end up showing a loss, part or all of that loss may reduce some of your other taxable income.  That could be beneficial to reduce your taxes. 

Here is a renters resource that may have some information that can help you decide how to proceed:

https://turbotax.intuit.com/tax-tips/rental-property/real-estate-tax-and-rental-property/L3e09vT71

Hope this helps!

Cindy

[Opus 17]

It's really not clear what you want to do.  You may be better off speaking to your own professional.

If only your child lives there, you don't have to charge rent.  It's just family helping family.  And trying to declare it as a rental could cause tax issues unless you rent at fair market value (what you would charge a stranger.)

If you want to allow a roommate and you plan to charge rent, then you need to talk to an attorney about the condo association rules, rental contracts, and so on.  You can rent 1/2 the home to a stranger at market value and let your child live in the other half for free, or you can rent to both at fair market value.  If you charge less than fair market rent, your ability to take certain rental deductions is limited.  On the other hand, doing a formal lease with your own child at full market rent may not be something you really want to do.

You have to start by asking yourself what is really going on?  You bought a second home, and your child lives there temporarily? You bought a home for your child?  Did you plan on a roommate situation?

[rjs]

@Jonster 

It's important to consult a tax professional before you take any further action. You need to take into consideration what the tax effects will be when you and your spouse pass away. You might find that the tax effects of leaving your daughter on the deed, or taking her off the deed, are larger than you expected. Ask the tax pro the following questions.

• What would be the immediate tax effect for us or our daughter if we take our daughter off the deed now?
• If we leave our daughter on the deed, or if we take her off the deed, how will that affect the tax that she has to pay when she sells the condo after we pass away?