Modification of Support primarily based on rental losses

[bd420]

What is the name of your state?
Michigan

My ex-wife has paid $60 for an early review for a change in the existing child support. We have co-custodial/joint physical/legal.

Using the 2007 Michigan Child Support and Alimony Calculations Software by MarginSoft, Version 6.7, I am able to replicate our current 2005 based arrangement, including the Mecical expenses ration.

My ex-wife has a dwelling on her main house property that could be rentable. In an effort to make this dwelling sufficient for renting, she spent in excess of $24,000 in repairs on this 1 room, 500 square foot structure, which left her 2006 Adjusted Gross Income at $71.

Her original income, as reported on Box 1 of the Federal W2 is $24,241.

The 2007 Michigan CS Program doesn't specifiy rental losses/expenses directly.

My ex-wife is under the impression that her $71 2006 income will be what is used to compute the new CS amount. Is this true?

Regardless, since it's late July, I was already using our computed 2007 incomes, and both of us got the exact same percentage raises since 2006. She informed me that although she might not have another $24,000 in rental fixer uppers this year, she is already into the thousands in losses.

This might not matter, so I'll mention it last. Her father is now living in the rental, and is unfortunately unable to pay for rent at all. He just had his house foreclosed. My ex-wife's live-in friend also does not contribute in any form towards the main house's expenses.

She has refinanced the property, so maybe she is claiming the lien is on the rental? I don't know, just grasping at straws, strange situation.

Thanks, and if you need any more info, I'll be glad to supply what I know,

bd.What is the name of your state?

 

[nextwife]

HEr choice to support a boyfriend and her dad (doesn't he get SS at all?) has no bearing on her duty to share support of her son, nor does her BFs unemployed status require you to supplement him by paying mom more so he can contribute to the household less.. Insist she be imputed a wage based on what she made previously and could be earning.

 

[bd420]

Her father still works, and so does her friend, they just don't contribute, at least this is what she is telling me.

You mentioned imputting a wage on what she could be earning, would this be what she could be earning on the rental, as well as what she could be getting from the live-in as far as regular living expenses? The later is a good point, because if someone is living with you and they are alledgedly not paying for their usage of utilities for instance, that will drive up that price and make those bills larger. One would think there has to be some compensation occuring, but she won't admit to this, she's sheltering money.

The rental loss is the big issue, from what I'm reading, it's a passive activity loss, and is not meant to count against non-passive income, ie, her job. Not coincidentally, on Schedule E, if you make less than $100,000 you can claim up to $25,000 in passive losses, so she maxed that out.

 

[CJane]

I don't think you need to worry about having an income imputed... as she HAS an income.

Unless her ACTUAL income (as opposed to taxable income) has changed fairly dramatically, she's probably not eligible for a modification and you need to be able to present THAT to the courts.

 

[bd420]

Actually my ex-spouses income is publicly available, as is mine, she works for a state university. Both of our salaries have increased the same percentage in the 3 years since the original CS agreement.

I spoke to an atty today that stated the decision to soak enough money into the rental as to come out with a 24k loss on Sched E was simply a really bad business/investment decision and has no relevance on her actual income in box 1 of her Fed W2. She also commented that any portion of these expenses would have been much more well spent on the kids instead.

The atty had an interesting perspective by saying that, with the equal overnights that we have per year, my ex-spouse actually made a conscious decision to spend her own, inate CS/earnings on this rental, and that is the bigger story here in her mind. I hadn't thought of it that way, but obviously there is a lot more support that both children receive collectively beyond the amount that passes from my hands to my ex-wife's bank account, and we are both responsible for spending this money on our kids in a reasonable and responsible manner.

Therefore, what does it say about her when she chooses to spend all but $71 of her non-passive income for the entire year on rental expenses?! Regardless if these expenses have an affect on the new CS numbers when we meet with the referee/judge, I think she's shown that her priorities aren't where they should be.

Thanks,

bd

 

[CJane]

Therefore, what does it say about her when she chooses to spend all but $71 of her non-passive income for the entire year on rental expenses?! Regardless if these expenses have an affect on the new CS numbers when we meet with the referee/judge, I think she's shown that her priorities aren't where they should be.

Thanks,

bd

Honestly? As long as the kids are warm, fed, clothed, bathed, and cared for adequately according to the law (which is a VERY LOW standard, by the way) you're not going to get very far with this idea.

It's possible her live-in is buying all the groceries or making the mortgage payment, or whatever. You don't know, and don't frankly have the right to know. How she spends her own money or the CS money is none of your business.

She's not likely to be successful in her efforts for a raise in support based on what she's presented, but if it's been 3 years, it's time for a review anyway.

 

[bd420]

I'm glad I don't share your cavalier attitude on this one. Nothing like striving to provide the lowest std of living for your kids so you can presumably shield income from the fed govt while trying to play the other side of the system.

It's my belief, it's not like the court can take that away from me at some CS hearing. She has placed the kids on the back burner and is on the fast track to a foreclosure and bankruptcy within 3 yrs of receiving a 10k cash settlement and having all of her 30k in cc debts relinquished as well.

How she spends any money shouldn't be anyones business until she tries to get more from you that she most likely doesn't deserve, a little pre-emptive maintenance will hopefully go a long way.

I agree her efforts will be hardly fruitful, although I don't see the need to review when public records will show the salaries have increased the same pct, if anythng, I could benefit from this hearing, something I don't care about quite frankly, as I'll just increase the kids allowance, something she states she can't afford (wonder why ).

I'll have the postmortem tomorrow.

bd

 

[bd420]

Update on the hearing with the rental losses issue

We met in front of a FOC referee for 1/2 hour, and in the end, the case for an increase was thrown out.

Rental losses and rental income were not used at all.
Our filing status's could only be single or joint, according to the referee's program for CS calculator, she originally had me paying more because she used single for me.

Medical was included into the CS amount, unlike our previous order, in which I paid 2/3 of all co-pays. When she deducted the medical out, the final support amount increased, but was within the $25 limit, so there was no change.

Bottom line is there was no change, rental losses are considered to the point that there is no rental income, which the ref claimed is typical, therefore, I may persue making some extra money on a rental myself. To say people who have a rental make no money whatsoever is absurd, but I'll take advantage of it if the state is going to be that ignorant.

bd420