Homeowners taxes

[tikibird12maui]

What is the name of your state (only U.S. law)? California (CA)
When I retire and move Maui in July, and want to file my taxes as a resident of Hawaii, but I still have my home in CA... Do I still put in the property taxes and mortgage interest as usual for my CA home? My son and his wife are currently residing in my CA home.

 

[LdiJ]

What is the name of your state (only U.S. law)? California (CA)
When I retire and move Maui in July, and want to file my taxes as a resident of Hawaii, but I still have my home in CA... Do I still put in the property taxes and mortgage interest as usual for my CA home? My son and his wife are currently residing in my CA home.

For your federal return yes, you would still claim your mortgage interest and property taxes on your home in Ca. You are going to need to file part year returns for both HI and CA for 2011, and I am not familiar with whether or not mortgage interest or property taxes is deductible on those.

 

[tikibird12maui]

Thanks... Yea, I only think the interest and taxes are reported in the federal. So even if I'm not living in the home, I should be good on claiming all of the benefits since I still own the home... right?

 

[LdiJ]

Thanks... Yea, I only think the interest and taxes are reported in the federal. So even if I'm not living in the home, I should be good on claiming all of the benefits since I still own the home... right?

You would claim it as a second home on schedule A unless you turn it into a rental, then you would claim the mortgage and interest on schedule E.

 

[tikibird12maui]

Oh, I'll be renting in Hawaii until my home in CA sells. I just wanted to be sure I will be able to claim all my deductions on my CA home as I've done in the past, even tho' I'll be living in Hawaii. I wish I could afford 2 homes... ; )

 

[FlyingRon]

Oh, I'll be renting in Hawaii until my home in CA sells. I just wanted to be sure I will be able to claim all my deductions on my CA home as I've done in the past, even tho' I'll be living in Hawaii. I wish I could afford 2 homes... ; )

It's not your primary residence, but you still can deduct it as a qualified second home.

http://www.irs.gov/pub/irs-pdf/p936.pdf

Your next item to watch is whether when you eventually sell that you've lived in that home as your primary residence for 24 out of the prior 60 months so that you may exclude a good chunk of the capital gain.

 

[LdiJ]

It's not your primary residence, but you still can deduct it as a qualified second home.

http://www.irs.gov/pub/irs-pdf/p936.pdf

Your next item to watch is whether when you eventually sell that you've lived in that home as your primary residence for 24 out of the prior 60 months so that you may exclude a good chunk of the capital gain.

I agree, you won't want to wait beyond a strict 36 months to close on a sale. However in today's market, in CA, there won't necessarily be a gain.

 

[tikibird12maui]

I don't understand why I would have to claim the home I own in CA as a secondary home, if I'm going to be renting in HI?

 

[FlyingRon]

I don't understand why I would have to claim the home I own in CA as a secondary home, if I'm going to be renting in HI?

Because your first home is the the one you're living in. It doesn't matter if you're the owner or not. The fact that you're not the owner means it's not a "qualified home" for the purposes of taking the hoe deductions. If lived in a house you owned, you could have two qualifying houses, your primary residence and a second home. Since you don't own the one you're living in, you just have the qualified second home.

 

[LdiJ]

Because your first home is the the one you're living in. It doesn't matter if you're the owner or not. The fact that you're not the owner means it's not a "qualified home" for the purposes of taking the hoe deductions. If lived in a house you owned, you could have two qualifying houses, your primary residence and a second home. Since you don't own the one you're living in, you just have the qualified second home.

It also doesn't make any difference to your taxes. It just allows you to claim the mortage interest and property taxes because the deductions are allowed for a second home.

 

[tikibird12maui]

I know I must sound like I'm talking in circles, but the "lightbulb" is only at 50 watts... I guess one question that may be the other 50 watts is: When my son & his wife move into the CA home, they will be just covering the mortgage, equity line, taxes & insurance, which will be less than fair market value, until the home sells. Will I have to claim that as income??? Since I'll be retired at that time, I don't want to screw up my SS & pension benefits. Also, if I do have to claim it as income, do I have deductions for the home that would bring that total income down?

 

[FlyingRon]

You probably aren't making too much money on that. The interest, taxes, and insurance would all be deductible from the gross rent (by the way the Insurance is not deductible as a second home) as well as depreciation (which you'll have to recapture when you sell).