I have a new client. They have a rental in Florida and live in Michigan. Her mother is the tenant. They also visit her and I'm sure it is over 14 days per year. In the past the big franchise that prepared their returns deducted utilities, including cable, association dues, appliances, repairs & maintenance, etc. They had losses over $20k the past few years. In addition, the amount of rental income was less than the utilities, insurance and association dues.
In 2008 she said that her mother didn't pay any "rent" and they paid all of the expenses. I'm going to treat it as a second home and only deduct the mortgage interest and property taxes. Is this correct? Am I missing something? I told her what should be done, and I got this response:
"I guess we had bad advice from X & X XXXXX. They told us we had to charge my mother something in order to deduct anything. They told me you could only take a loss for three years on a home and then no other deductions for losses."
In 2008 she said that her mother didn't pay any "rent" and they paid all of the expenses. I'm going to treat it as a second home and only deduct the mortgage interest and property taxes. Is this correct? Am I missing something? I told her what should be done, and I got this response:
"I guess we had bad advice from X & X XXXXX. They told us we had to charge my mother something in order to deduct anything. They told me you could only take a loss for three years on a home and then no other deductions for losses."
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