Hello all, I haven't been on here for some time. For those who don't remember I retired from a Federal LEO position at 49 eight years ago with thirty years combined military/federal service. We are of relatively modest means, but comfortable.
Looking today for some suggestions about a situation with a second home we bought this past year.
We live in FL and our only child (23) graduated from a State university here this past spring with her bachelor's degree. She landed a top-notch 4 year doctoral program out in Texas (Baylor) that actually pays her about 10 to 12k a year to attend. This amount will increase a bit each year topping to about 25k her fourth year. According to what I've been able to find out .... the income should count as W-2 income as she perform 20 hours of work each week for the university to receive it. We've carried her as a dependent up to this year ... and guessing it will be advantageous to do her own taxes from this year onward.
We agreed with her when applying to this particular highly competitive program that if she got in we would cover her housing, car expenses, and health insurance for the four years. She takes care of her own utilities, food, clothes, misc school expenses, etc. It's something we wanted to do for her. She put herself through four years of undergraduate with high marks on a double academic scholarship and living at home and we'd like to help her finish her lengthy education with zero debt.
Looking at house/apartment prices out in Waco and the length of her stay there, we determined to buy last May a 1650 sq ft newer home close to campus for 165k with a combo of cash & borrowing 90k for 15 years against the equity in our paid-for home here in FL.
I've only just started reviewing IRS 280 on it. I'm no tax wizard, we don't even have enough deductions to itemize anymore. We have pretty high medical expenses each year ... but not enough to justify itemizing without other deductions to go along with them.
So the question is ... can we set this up as a rental to her with her paying us out of her university income, and then gift the money back in some other manner so as to take advantage of being able to deduct property tax, mortgage interest, etc?
To further complicate matters ... she is contemplating taking on a roommate after the first of the year who we will probably agree on paying approx $350 a month to us to stay there.
Is setting this up as a Schedule E rental something that is possible or advisable? I'd really like to get some kind of tax break on on the mortgage interest and particularly the high property tax in Texas. Is it something I really ought to go see a CPA about? Or is it something I probably really don't want to mess around with potentially causing us IRS troubles?
Thanks in advance for any info/suggestions.
AndyS
Looking today for some suggestions about a situation with a second home we bought this past year.
We live in FL and our only child (23) graduated from a State university here this past spring with her bachelor's degree. She landed a top-notch 4 year doctoral program out in Texas (Baylor) that actually pays her about 10 to 12k a year to attend. This amount will increase a bit each year topping to about 25k her fourth year. According to what I've been able to find out .... the income should count as W-2 income as she perform 20 hours of work each week for the university to receive it. We've carried her as a dependent up to this year ... and guessing it will be advantageous to do her own taxes from this year onward.
We agreed with her when applying to this particular highly competitive program that if she got in we would cover her housing, car expenses, and health insurance for the four years. She takes care of her own utilities, food, clothes, misc school expenses, etc. It's something we wanted to do for her. She put herself through four years of undergraduate with high marks on a double academic scholarship and living at home and we'd like to help her finish her lengthy education with zero debt.
Looking at house/apartment prices out in Waco and the length of her stay there, we determined to buy last May a 1650 sq ft newer home close to campus for 165k with a combo of cash & borrowing 90k for 15 years against the equity in our paid-for home here in FL.
I've only just started reviewing IRS 280 on it. I'm no tax wizard, we don't even have enough deductions to itemize anymore. We have pretty high medical expenses each year ... but not enough to justify itemizing without other deductions to go along with them.
So the question is ... can we set this up as a rental to her with her paying us out of her university income, and then gift the money back in some other manner so as to take advantage of being able to deduct property tax, mortgage interest, etc?
To further complicate matters ... she is contemplating taking on a roommate after the first of the year who we will probably agree on paying approx $350 a month to us to stay there.
Is setting this up as a Schedule E rental something that is possible or advisable? I'd really like to get some kind of tax break on on the mortgage interest and particularly the high property tax in Texas. Is it something I really ought to go see a CPA about? Or is it something I probably really don't want to mess around with potentially causing us IRS troubles?
Thanks in advance for any info/suggestions.
AndyS
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