Complete Labor Law Poster for $24.95
from www.LaborLawCenter.com, includes
State, Federal, & OSHA posting requirements

Announcement

Collapse
No announcement yet.

Getting married - 3 homes - what do I do?

Collapse
This topic is closed.
X
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Getting married - 3 homes - what do I do?

    I own one home free and clear. I am making payments on a second home. My
    fiancee is making payments on her home.

    After we marry, because we own 3 homes, I assume:

    1. We will not be able to deduct mortgage interest on the both of the homes
    on which we currently are making payments.
    2. If we sell one of the homes, we will not be able to use the $500k capital
    gains exemption.

    Is there a way we can marry, retain the 3 homes, and avoid losing the tax
    breaks listed above?

    One thought I had was to set up my "free and clear" home as an asset of my
    business (corporation). The business would not be deducting anything
    associated with the home (utilities, taxes, etc.). Then we would be making
    payments on 2 homes (primary and secondary residences), and if we sold one
    of them we could take full advantage of the 500k capital gains exemption.

    Any info or comments about this would be appreciated. Thanks.





  • #2
    Getting married - 3 homes - what do I do?

    > I own one home free and clear. I am making payments on a second home.
    My fiancee is making payments on her home. After we marry, because we own 3 homes, I assume: 1. We will not be able to deduct mortgage interest on the both of the homes on which we currently are making payments.
    Incorrect. You may deduct interest on two homes.
    2. If we sell one of the homes, we will not be able to use the $500k capital gains exemption.
    The $500K exclusion is only allowed on a PRINCIPAL RESIDENCE which BOTH of
    you have lived in for two of five years. (It may be owned by either of you.)
    Is there a way we can marry, retain the 3 homes, and avoid losing the tax breaks listed above?
    One thought I had was to set up my "free and clear" home as an asset of my business (corporation). The business would not be deducting anything associated with the home (utilities, taxes, etc.). Then we would be making payments on 2 homes (primary and secondary residences), and if we sold one of them we could take full advantage of the 500k capital gains exemption.
    As mentioned above, the full $500K exclusion applies only to your primary
    residence after you both have lived in it for two years.
    --
    Don EA in Upstate NY


    Comment


    • #3
      Getting married - 3 homes - what do I do?

      > I own one home free and clear. I am making payments on a second home.
      My fiancee is making payments on her home. After we marry, because we own 3 homes, I assume: 1. We will not be able to deduct mortgage interest on the both of the homes on which we currently are making payments.
      Incorrect. You may deduct interest on two homes.
      2. If we sell one of the homes, we will not be able to use the $500k capital gains exemption.
      The $500K exclusion is only allowed on a PRINCIPAL RESIDENCE which BOTH of
      you have lived in for two of five years. (It may be owned by either of you.)
      Is there a way we can marry, retain the 3 homes, and avoid losing the tax breaks listed above?
      One thought I had was to set up my "free and clear" home as an asset of my business (corporation). The business would not be deducting anything associated with the home (utilities, taxes, etc.). Then we would be making payments on 2 homes (primary and secondary residences), and if we sold one of them we could take full advantage of the 500k capital gains exemption.
      As mentioned above, the full $500K exclusion applies only to your primary
      residence after you both have lived in it for two years.
      --
      Don EA in Upstate NY


      Comment


      • #4
        Getting married - 3 homes - what do I do?

        "Don Priebe" <[email protected]> wrote in message
        news:[email protected]
        I own one home free and clear. I am making payments on a second home. My fiancee is making payments on her home. After we marry, because we own 3 homes, I assume: 1. We will not be able to deduct mortgage interest on the both of the homes on which we currently are making payments. Incorrect. You may deduct interest on two homes.
        Even though we own a third?
        2. If we sell one of the homes, we will not be able to use the $500k capital gains exemption.
        The $500K exclusion is only allowed on a PRINCIPAL RESIDENCE which BOTH of you have lived in for two of five years. (It may be owned by either of
        you.)

        And it doesn't matter how many homes we own?
        Is there a way we can marry, retain the 3 homes, and avoid losing the tax breaks listed above? One thought I had was to set up my "free and clear" home as an asset of my business (corporation). The business would not be deducting anything associated with the home (utilities, taxes, etc.). Then we would be making payments on 2 homes (primary and secondary residences), and if we sold one of them we could take full advantage of the 500k capital gains exemption.
        As mentioned above, the full $500K exclusion applies only to your primary residence after you both have lived in it for two years.
        And it doesn't matter how many homes we own?

        Thanks, Don!



        Comment


        • #5
          Getting married - 3 homes - what do I do?

          "Don Priebe" <[email protected]> wrote in message
          news:[email protected]
          I own one home free and clear. I am making payments on a second home. My fiancee is making payments on her home. After we marry, because we own 3 homes, I assume: 1. We will not be able to deduct mortgage interest on the both of the homes on which we currently are making payments. Incorrect. You may deduct interest on two homes.
          Even though we own a third?
          2. If we sell one of the homes, we will not be able to use the $500k capital gains exemption.
          The $500K exclusion is only allowed on a PRINCIPAL RESIDENCE which BOTH of you have lived in for two of five years. (It may be owned by either of
          you.)

          And it doesn't matter how many homes we own?
          Is there a way we can marry, retain the 3 homes, and avoid losing the tax breaks listed above? One thought I had was to set up my "free and clear" home as an asset of my business (corporation). The business would not be deducting anything associated with the home (utilities, taxes, etc.). Then we would be making payments on 2 homes (primary and secondary residences), and if we sold one of them we could take full advantage of the 500k capital gains exemption.
          As mentioned above, the full $500K exclusion applies only to your primary residence after you both have lived in it for two years.
          And it doesn't matter how many homes we own?

          Thanks, Don!



          Comment


          • #6
            I really think it depends on how you file. If you file married filign separately, you should be able to get deductions on all three homes based on your separate filings regarding your separate money and property. As a practical matter, if you own one home free and clear, you likely get no tax advantage beyong deducting property taxes, so then it becomes what home is primary and which is the second home and then the other one, unless a rental or investment property of some kind, likely would not qualify for any deductions. You should consult a local accountant who can look at your overall situation and advice, but it sounds like it has more to do with how you file if the goal is all three properties being able to be regarded on the taxes.

            Comment


            • #7
              Getting married - 3 homes - what do I do?

              >>> I own one home free and clear. I am making payments on a second
              home. My fiancee is making payments on her home. After we marry, because we own 3 homes, I assume: 1. We will not be able to deduct mortgage interest on the both of the homes on which we currently are making payments. Incorrect. You may deduct interest on two homes. Even though we own a third?
              Pub 936 (http://www.irs.gov/pub/irs-pdf/p936.pdf) goes into the details.
              Basicly you may deduct the interest on your "main" home (where you normally
              live) and one other home of your choosing.
              2. If we sell one of the homes, we will not be able to use the $500k capital gains exemption. The $500K exclusion is only allowed on a PRINCIPAL RESIDENCE which BOTH of you have lived in for two of five years. (It may be owned by either of you.) And it doesn't matter how many homes we own?
              You only own one "Principal Residence". Pub 523
              (http://www.irs.gov/pub/irs-pdf/p523.pdf) for the details on the exclusion.
              Is there a way we can marry, retain the 3 homes, and avoid losing the tax breaks listed above?
              One thought I had was to set up my "free and clear" home as an asset of my business (corporation). The business would not be deducting anything associated with the home (utilities, taxes, etc.). Then we would be making payments on 2 homes (primary and secondary residences), and if we sold one of them we could take full advantage of the 500k capital gains exemption.
              As mentioned above, the full $500K exclusion applies only to your primary residence after you both have lived in it for two years. And it doesn't matter how many homes we own?

              Comment


              • #8
                Getting married - 3 homes - what do I do?

                >>> I own one home free and clear. I am making payments on a second
                home. My fiancee is making payments on her home. After we marry, because we own 3 homes, I assume: 1. We will not be able to deduct mortgage interest on the both of the homes on which we currently are making payments. Incorrect. You may deduct interest on two homes. Even though we own a third?
                Pub 936 (http://www.irs.gov/pub/irs-pdf/p936.pdf) goes into the details.
                Basicly you may deduct the interest on your "main" home (where you normally
                live) and one other home of your choosing.
                2. If we sell one of the homes, we will not be able to use the $500k capital gains exemption. The $500K exclusion is only allowed on a PRINCIPAL RESIDENCE which BOTH of you have lived in for two of five years. (It may be owned by either of you.) And it doesn't matter how many homes we own?
                You only own one "Principal Residence". Pub 523
                (http://www.irs.gov/pub/irs-pdf/p523.pdf) for the details on the exclusion.
                Is there a way we can marry, retain the 3 homes, and avoid losing the tax breaks listed above?
                One thought I had was to set up my "free and clear" home as an asset of my business (corporation). The business would not be deducting anything associated with the home (utilities, taxes, etc.). Then we would be making payments on 2 homes (primary and secondary residences), and if we sold one of them we could take full advantage of the 500k capital gains exemption.
                As mentioned above, the full $500K exclusion applies only to your primary residence after you both have lived in it for two years. And it doesn't matter how many homes we own?

                Comment


                • #9
                  Getting married - 3 homes - what do I do?

                  On 7/2/05 11:44 PM, in article [email protected], "Tax Question"
                  <[email protected]> wrote:
                  I own one home free and clear. I am making payments on a second home. My fiancee is making payments on her home. After we marry, because we own 3 homes, I assume: 1. We will not be able to deduct mortgage interest on the both of the homes on which we currently are making payments.
                  You are allowed to deduct interest on your principal residence and one other
                  residence. Since you have mortgages on two residences, if you live in one of
                  them you can deduct the interest on both. If you live in the free-and-clear
                  one, you need to choose which of the others you will deduct.
                  2. If we sell one of the homes, we will not be able to use the $500k capital gains exemption.
                  To get the $500K exemption, both of you need to live in the home as your
                  principal residence for 2 years. However, each of you has a $250,000
                  exemption available for the home you occupied as principal residence prior
                  to being married, if you lived in it for 2 years out of the 5 prior to the
                  sale date. So it's possible to sell a home and exclude up to $250K on it; if
                  the timing is right you could sell 2 homes and get an exclusion on each one.
                  If you file separate returns you might be able to do that in one year. This
                  might be one of the few examples where filing separately could make sense.
                  Is there a way we can marry, retain the 3 homes, and avoid losing the tax breaks listed above? One thought I had was to set up my "free and clear" home as an asset of my business (corporation). The business would not be deducting anything associated with the home (utilities, taxes, etc.). Then we would be making payments on 2 homes (primary and secondary residences), and if we sold one of them we could take full advantage of the 500k capital gains exemption.
                  It's never a good idea to put real estate into a corporation.
                  Any info or comments about this would be appreciated. Thanks.
                  --
                  Tom Healy, CPA
                  Boulder, CO
                  Web: http://www.tomhealycpa.com

                  Comment


                  • #10
                    Getting married - 3 homes - what do I do?

                    On 7/2/05 11:44 PM, in article [email protected], "Tax Question"
                    <[email protected]> wrote:
                    I own one home free and clear. I am making payments on a second home. My fiancee is making payments on her home. After we marry, because we own 3 homes, I assume: 1. We will not be able to deduct mortgage interest on the both of the homes on which we currently are making payments.
                    You are allowed to deduct interest on your principal residence and one other
                    residence. Since you have mortgages on two residences, if you live in one of
                    them you can deduct the interest on both. If you live in the free-and-clear
                    one, you need to choose which of the others you will deduct.
                    2. If we sell one of the homes, we will not be able to use the $500k capital gains exemption.
                    To get the $500K exemption, both of you need to live in the home as your
                    principal residence for 2 years. However, each of you has a $250,000
                    exemption available for the home you occupied as principal residence prior
                    to being married, if you lived in it for 2 years out of the 5 prior to the
                    sale date. So it's possible to sell a home and exclude up to $250K on it; if
                    the timing is right you could sell 2 homes and get an exclusion on each one.
                    If you file separate returns you might be able to do that in one year. This
                    might be one of the few examples where filing separately could make sense.
                    Is there a way we can marry, retain the 3 homes, and avoid losing the tax breaks listed above? One thought I had was to set up my "free and clear" home as an asset of my business (corporation). The business would not be deducting anything associated with the home (utilities, taxes, etc.). Then we would be making payments on 2 homes (primary and secondary residences), and if we sold one of them we could take full advantage of the 500k capital gains exemption.
                    It's never a good idea to put real estate into a corporation.
                    Any info or comments about this would be appreciated. Thanks.
                    --
                    Tom Healy, CPA
                    Boulder, CO
                    Web: http://www.tomhealycpa.com

                    Comment

                    The LaborLawTalk.com forum is intended for informational use only and should not be relied upon and is not a substitute for legal advice. The information contained on LaborLawTalk.com are opinions and suggestions of members and is not a representation of the opinions of LaborLawTalk.com. LaborLawTalk.com does not warrant or vouch for the accuracy, completeness or usefulness of any postings or the qualifications of any person responding. Please consult a legal expert or seek the services of an attorney in your area for more accuracy on your specific situation.
                    Working...
                    X