What to do if you’re on the losing end of a foreclosure lawsuit
When your property is being sold to someone else, you’ll usually be able to claim a deduction for the value of the home you’re renting.
But there are cases where the value could be significantly higher than the original purchase price.
For example, if you buy a home and the appraiser says the home is worth $2.8 million, you’re allowed to claim up to $200,000 as a deduction.
If your property’s appraiser actually says the property’s value is closer to $5.9 million, your deduction is only $150,000.
If you own property valued at more than $5 million, the mortgage is not deductible, even if you live in that home.
The biggest caveat here is that the mortgage loan itself isn’t deductible, but rather the value you’re paying for the home.
If the value is more than what you paid for the loan, you have to subtract the amount you paid out of the value to qualify for the deduction.
What you can deduct If you’re buying a home for yourself, you can claim a $50,000 deduction for every year you’re a mortgage owner.
If it’s yours, you don’t have to pay a dime to deduct your mortgage interest, since you aren’t an owner.
However, if the property is rented, you may be able the $100,000 mortgage deduction.
However,… the only exception to this rule is if you are renting a property from someone who is not a mortgage borrower.
If this happens, you must pay the mortgage lender the full amount of the loan.
In addition, you cannot deduct your expenses related to owning the property, including rent, insurance, maintenance, and the like.
In this situation, you still need to figure out how much you’re actually paying to rent the home, since the property isn’t considered your principal residence.
For instance, you might have a mortgage for the entire house, but you can’t deduct expenses that are incurred for a tenant’s living quarters, such as rent, utilities, and so forth.
If you own a property with a lease, you won’t be able take the deduction for renting it.
But you can take the deductions for property taxes and maintenance, which is a different deduction.
If you’re selling your home, you should consider deducting all the expenses associated with the sale.
If someone is paying the mortgage and you can prove you paid a portion of the mortgage, you could claim up the entire amount.
If they’re paying the rent, the rent is not included in the sales price, so you’re only allowed to deduct half the cost of the property.