How should we file? Recently married, I made 61k, she made 115k. All of the rental properties are in my name?

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unleashthefury asked:


I own three investment rental properties and I can take huge losses on them. How do we file so that we pay the least amount of taxes. Together? Married separately? Can she take losses on my rental properties. Help Please !!!! I don’t want to pay someone elses welfare check with our hard work.

RAUL
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This entry was posted on Thursday, December 11th, 2008 at 2:45 pm and is filed under United States. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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5 Responses to “How should we file? Recently married, I made 61k, she made 115k. All of the rental properties are in my name?”

  1. OCTAVIO Says:
    December 14th, 2008 at 10:48 pm

    HANS

    ask a CPA

  2. STEVIE Says:
    December 15th, 2008 at 12:43 am

    IVORY

    Unless you’re actively participating in those rentals (which is damn hard to prove), you can’t take “huge” losses, since it’s a passive activity. Your losses are limited to the amount of passive gains. But you can carry this forward.

    You should file jointly. It doesn’t matter whose name is on what- all the income goes into a big pool along with all of your deductions, and it’s taxed as a pot. The only time filing separately would be useful is if one of you has a large tax debt, or a bunch of medical expenses (although at your incomes, unless one of you was in the hospital fighting off some serious disease, that’s doubtful.) 9 times out of 10, MFJ offers a tax advantage over MFS.

    Good luck! :0)
    **btw v b is right about “active” versus “real estate professional”. I just finished helping a client through a nightmare IRS audit due to the whole “real estate professional” issue. Proving you’re active isn’t a problem- thanks for pointing out the difference and my mistake. :0)

  3. BORIS Says:
    December 16th, 2008 at 2:42 am

    BOOKER

    MFJ. Without losses, your combined income is $176,000. That’s too high to take rental losses, so all losses would be put on form 8582 and postponed until a later year or when yuo sell.

    If you did not live together (highly unlikely in the year you got married!!!–the next post is dead on target) and you file MFS, the loss is limited to $12,500 (1/2 of $25,000) and the phaseout begins at $50,000. At $61,000, you’d be limited to claiming a loss of no more than $7000 on the MFS return.

    Be advised, if this applies to you, you really, really need to run some dummy tax returns before 1/15. You may owe estimated taxes and the penalty works out to 4% of what you owe.

    By the way “active” isn’t difficult. Real Estate Professional is the one that’s impossible.

  4. KENNY Says:
    December 19th, 2008 at 4:09 am

    DUSTY

    You can run it both ways (Married - Filing Jointly or Married - Filing Separately) and see which way gives you the best result.

    Keep in mind though that you won’t be able claim rental losses any longer. They will be deferred until you sell the property. On a joint return, your combined income is too high to claim the losses and, on a separate return, you aren’t allowed any losses at (assuming that you live together).

    …and, not to get political, but the money spent on Corporate welfare is vastly higher than individual welfare.

  5. MIKE Says:
    December 21st, 2008 at 4:48 pm

    ROB

    You would be well advised to look at a married, filing joint, tax return. You combine income and losses and lower the end figure for your lowest total tax bite. Good luck and Happy New Year (a bit of sarcasm there).