Hello - Right now, I'm asset rich but cash flow poor (my annual income is about $6,500). I'm fortunate enough to own some valuable commercial property (paid in full). Anyway, we plan to relocate and I bought a property in another state using a bridge-type loan against my commercial building (we have our current home on market). Basically, a 1 yr loan and at end I'll owe approx. $17,000 in interest, plus the principal back. Since my domestic partner makes around 100K, can she deduct the 17K off her taxes? Since my annual income is so low, I'm sure hoping somehow to deduct the interest. THNX!
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fully deductible
>> I'm sure hoping somehow to deduct the interest<<
The 17K is fully deductible against the property's earnings. I don't understand why you think your partner might be involved in this. -
Jainen, let me explain...
The commercial property (in my name only) I'm taking the loan against provides me about 5K income. Add that to the 1.5K and my total yr. income is $6,500. The house we're buying in another state will be in my sole name only, for now at least. Since I have a 6.5K income, and my fiancee' is around $100,000...and I'll owe around 17K interest and end of year loan, I don't have much room for any mortgage interest tax deductions, but my fiancee' does.Comment
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So you offset the $17k in interest against the earnings,
and carry forward the difference into a year where you have enough to "eat it up". You can't just "give" your deduction to someone with more taxable income, but if you figure it out call me, because I sure could use some.
JoshInNCComment
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ok but...what if we get married...
Which we plan to do early 2007, we'd be able to both 'eat up' the interest deduction...right?Comment
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maybe
It would depend on how the deduction for the property is being taken. You can have a loss of up to $25,000 from a "passive activity" against other income, with any remainder being carried forward. If the property is held within an entity (LLC, Corp) you would need sufficient basis to deduct the loss.
You may want to buy an hour's worth of time from a competent professional in you area to review your specific situtation and develop a plan tailored to your needs.
JoshInNCComment
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>>ok but...what if we get married... <<
Don't do it!!!!!!!!
There is no good reason to get married just to take a tax deduction!!!!!!!!!
People today don't get married. Its not the in-thing. If you let her benefit from your assets you will never hear the end of it as she will always say she did it as a favor to you.Comment
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Getting married
I actually had a retired math teacher (PhD) who was thinking about marriage ask my opinion on whether getting married would be a tax advantage. I told him getting married should not be decided on the basis of its tax effect.Comment
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