Second Home

[judges4u]

I'm working on my 2019 tax return.  I bought a second home in 2017 so my brother would have a place to live as he was totally disabled and dying.  I made the payments every month.  Now that I think of it, could I have claimed my brother in 2017, 2018k, and 2019 for some kind of support?  He passed away in SEP 2019.  I lost a lot of money on the home because he did not take care of the place; he was disabled.  It sold for $15K less than I bought for; my brother let the home deteriorate; I was not aware because my children never told me just how bad the home was.  A very sad ending, but he did go to heaven.  )))  Thanks in advance for any help.

[xmasbaby0]

So sorry for the loss of your brother.  You were very kind in providing a place for him to live during his last years.

You might have been able to claim him as a dependent on your own tax return for those years and if so you can still amend the returns to do so. Did he have income during that time----NOT counting any Social Security he was receiving?

The amounts vary a little for each of the tax years, but if he had less than $4050-- for 2017, $4150 for 2018 or $4200 for 2019 of  yearly income not counting SS, then you can amend and claim him as a dependent.  For 2017 there was still a personal exemption of $4050 for claiming  dependent; for 2018 and 2019 the tax laws changed and you would only get the $500 credit for other dependents for claiming him.  Did you pay his medical expenses?  If you claim him as a dependent you can also enter the medical expenses you paid for him if you itemized deductions.

Since you are working on 2019 right now, here is the information you need to figure out if you can claim him for 2019.  The same rules apply for the other years but the amounts of income he could receive vary a little.  What you are looking for is if you can claim him as a qualifying relative.

IRS interview to help determine who can be claimed:

https://www.irs.gov/help/ita/who-can-i-claim-as-a-dependent

WHO CAN I CLAIM AS A DEPENDENT?

You can claim a child, relative, friend, fiance (etc.) as a dependent on your 2019 taxes as long as they meet the following requirements:

Qualifying child

• They are related to you.

• They cannot be claimed as a dependent by someone else.

• They are a U.S. citizen, resident alien, national, or a Canadian or   Mexican resident.

• They are not filing a joint return with their spouse.

• They are under the age of 19 (or 24 for full-time students).

• No age limit for permanently and totally disabled children

  •      They live with you for more than half the year (exceptions apply).

Qualifying relative

• They don't have to be related to you (despite the name).

• They cannot be claimed as a dependent by someone else.

• They are a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.

• They are not filing a joint return with their spouse.

• They lived with you the entire year.

• They made less than $4200  (not counting Social Security)

• You provided more than half of their financial support. More info

When you add someone as a dependent, we'll ask a series of questions to make sure you can claim them.

Related Information:

• Does a dependent have to live with me?

• What does "financially support another person" mean?

• Can I claim a newborn baby?

https://ttlc.intuit.com/questions/4499708-what-is-the-500-credit-for-other-dependents-family-tax-cre...

[Opus 17]

1. You could claim your brother as a dependent for 2017, 2018 and 2019 if you provided more than half his living support and if he had less than $4000 of taxable income and filed no tax return or only filed a return to claim a refund of withholding and did not claim dependents or other credits.  (The actual income amount was $4200 for 2019, $4050 for 2018, and I think $3900 for 2017.)   Non-taxable income like disability payments does not count for the taxable income test but does count as support not provided by you for the support test, you have to pay more than half his total support.   You may have to add up his total cost of living (food, clothing, medical expenses, utilities, and the value of the free housing you provided) and do the math to see if you provided more than half.  If you provided less than half (because he had SSI or other family members also helped support him), then anyone (including you) can claim him as a dependent as long as they provided more than 10% of his total support and they get a written agreement from everyone else who provided more than 10% of his support as to which person will claim him as a dependent.  

The value of claiming him as a dependent would have been $500 in 2018 and 2019 and somewhat more in 2017.  You could file amended returns now.  

2.  You can deduct mortgage interest you pay on your main residence and any one second home.  You can deduct property taxes you pay on all property you own.  These are itemized deductions on schedule A and your actual tax benefit depends on your other deductions and if you already itemize.  For 2018 and 2019, your property tax deduction might be limited by the $10,000 cap on the deduction for state and local taxes.  

When filing your amended returns for 2017, 2018 and 2019, you can include any mortgage interest and property taxes you paid for this house as long as it is your only other home (your only “second” home.)

3. You can’t take any deduction for the loss you incurred selling the property.  Losses on personal property are not deductible.   Nor can you deduct necessary repairs.  Ordinary cleaning and maintenance on your own property is something you are just supposed to do for yourself.  

4.  You can include as deductible medical expenses, any nursing care or other medical expenses you paid for your brother as long as you claim him as a tax dependent.  You can also deduct medical expenses you paid if he is disqualified from being your tax dependent by reason of more than $4000 of taxable income, so long as you still provided more than half his total living support (including the value of free housing).  Whether this gives you a tax benefit depends on your other medical and itemized deductions.  Unfortunately, housing is not a medical expense so you can’t deduct other housing costs this way.  

4a.  If your brother was diagnosed with a chronic or terminal illness, and required assistance with 2 or more activities of daily living, and if you paid for a home care aide to provide this assistance, and if the care was provided according to a written plan prepared by a qualified professional, then the entire cost of the aide would be a deductible medical expense if you paid for it.  If you hired an aide but these tests were not met, you must allocate the cost and can only deduct the percentage that actually covered nursing care.  Activities of daily living are eating, bathing, toileting, continence, transferring, and dressing.  

5.  If he was so sick that he could not be left alone and if you paid for a caregiver to watch him while you (and your spouse if you are married) could go to work, and if he is your tax dependent, you may qualify for the dependent care credit.  This would require that you provide the name, address and social security or business tax number of the caregiver.  Caregiver expenses while you were not at work would not qualify.  

That’s all I can think of.  

[judges4u]

Thank you so much. 

The house payment was $700.00 / month and I paid that.  The only other income he had was VA disability; I think around $300.00 / month and that was not taxable, so I added him as a dependent. 

Adding him on Turbo Tax is confusing since there is no option to note he did not live with me, but I provided for more than half his support.  Actually if SS and VA disability are not added, I supported him 100% for all intentional purposes.  He was also VA disabled, but I do not know the percentage.  Turbo tax wants to know if he was living with me when he passed away on 15 SEP 2019.  What to do? 

I paid $95K for the home and sold for $78K; a pretty good loss.  

Thank you

[judges4u]

Thank you very much.  I expanded on my first question.