ON Canada, the house is generating income from rent and it is an income. For mortgage purposes, this will be considered in your overall income minus the offset.

ON Canada - is this a one-time or guarranteed bonus - if guarranteed, then yes, If the bonus is happening in the last 2 to 3 years then yes. One time, it would help especially when a averaging income in the last 3 years.

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Hi, i am planning to rent out my house for few years as i need to relocate temporarily for my job. i will live back in the house at least for few years before i sell it again. can and should i depreciate the house? i heard it can cause confusion and problem when i sell it. also, is the principal amount of the mortgage payment counted as expense? thanks.

You MUST depreciate the home since the depreciation allowed OR ALLOWABLE (my emphasis) is subject to recapture at sale time. Note also that the depreciation recapture is taxable even if you qualify to exclude the gain on the sale of a personal residence AND that it's currently taxable at a higher rate than normally applies to long-term capital gains, i.e up to 25% instead of 15%. You depreciate the value of the improvements only (i.e. the house and other buildings) but not the land, so you must separate out the two. The buildings are depreciated on a 27.5 year straight-line schedule with no residual value. Your depreciable basis is the lower of your original adjusted cost basis or the fair market value of the property at the time that you converted it to business use. No, the principal amount on the mortgage is not deductible as an expense (although the depreciation deduction at least partially makes up for that).

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We're renting now in sfvalley. our rent is just under $2000/mo. for a 3b/2 1/2b townhouse. in our area, the house, condo, townhome prices are insane. avg is $550, 000 and going up everyday, altho not by much. everyone is telling us to buy for the obvious reasons, i.e., mortgage, tax savings, etc. we have no money for a down. if we bought, we'd be looking at close to $3000/mo mortgage. not counting the expenses added on. we have no kids, and make a decent wage...so we're getting killed in taxes. what should we do? rent til we retire in 2010? or buy now and not save for retirement, hoping to rake in the equity for the next 3 years. we'll be leaving the area then.

I would wait to buy for a couple years. In Southern California young couples, and immigrants who are inexperienced in mortgages are getting into bad loans. They are signing 100% financed loans that are interest only payments (they only pay the interest so the loan size never decreases) and it only stays interest only for 2 years at most. Others whom have owned their for a few years and just want a lower payment are signing option ARMs which actually add defered interest to the loan. In other words, the payment they make isn't enough to cover even the interest generated. So they start with a 100K mtg refinance, and in 3 years owe 115K on their mtg. Both these types of mortgages WILL fully index and amortize (the rates will increase to the maximum and they will be required to pay the full interest AND principal) after a time. Most of these events are going to occur in a few months, and so on for the next couple of years. This will cause rampant forclosure because these people will not be able to afford their house payments at that time. The appreciation of homes in SoCal is not enough to refinance if they went 100% financing, and the option arms can actually go beyond the value of the home so there is no refinance option in most cases. When forclosures happen, banks sell for extremely cheap. And since everything is worth what the buyer will pay for it, prices will drop for the surrounding area and the homes will be in a depreciating market. If there are many homes in the area selling for 50K, nobody can expect to sell their home for 500K. This will cause prices to drop, and the housing market will stabalize for several years after these events until the whole process starts again.

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For both of my questions, assume the business is purchasing a house with the intention of renting it out to make a profit. first: if a company purchases the property free and clear with cash, is that entire purchase amount reflected as an expense on the profit and loss statement, reducing the firm's taxable income by that amount? second: if the firm purchases the property by taking out a mortgage, is the entire monthly "principal and interest" mortgage payment reflected as an expense, or only the interest? also, if the firm makes additional principal payments, can those be counted as expenses to lower the firm's taxable income? thanks!

Michael, I like your question, and not just because we share first name. :) You actually make a lot of sense, and the tax system would be way simpler if it was based on your reasonable thinking. However, our tax system was designed by ____ (you fill the blank), so it makes no sense to business people but guarantees lifetime income for us accountants. Off my soap box now. I once wrote a long article (see my link below) that tried to describe the current system. Please read it. Meanwhile, here're couple pointers. 1. Unlike regular business expenses such as supplies, salaries, or insurance, "big tickets" items that are used to generate business income are not instantly deductible. Examples: computers, automobiles, and buildings. These items are called "assets" and they are deducted in small portions over a number of years. This weird and insanely over-complicated system is called depreciation and is often misunderstood even by accountants. 2. Each type of assets has its own formula and/or table to figure out depreciation each year. I included a link below, but it's suicide to calculate depreciation by hand. Must use computer software. For example, if you buy a residential house to use as a rental, you take the purchase price, subtract the value of land, and depreciate the result over 27.5 years, pro-rated monthly. I hope you will not try to comprehend why it's 27.5 years. (My best guess is that it is equal to the average number of purple Ford SUVs passing by the IRS building on September afternoons.) 3. Whether you paid cash, had down payment, financed 100% or made subsequent principal payments - makes absolutely NO difference on tax calculations. Instead of principal, you deduct depreciation, and it's figured AS IF you paid all cash. It does not change based on your financing, period. Yes, I know it makes no sense, but we already discussed that it's not supposed to. 4. Interest actually paid on the loan during the year is deductible in full. 5. So are insurance and property taxes, whether or not they were escrowed with the monthly mortgage payment. In fact, escrow does not matter. What matters is when the property tax and insurance premium were actually paid and how much, whether it was from escrow or by check or charge. I always suggest that the first year you start a business or buy real estate for business you should hire a tax professional who understands business and real estate, respectively. Do you see why? Michael Plaks, EA, Houston TX Specializing in real estate tax law www.MichaelPlaks.com

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My situation: i own & live in my condo. in the next 1-2 years, my fiance and i would like to buy a larger home for us to live in and rent out my condo. i have figured that i would take a minimum

You still do deduct your interest and taxes, they are expenses of the rental. Want you do is fill out an IRS form (Schedule E, I think). You put the rent and other income at the top, and then subtract all expenses, including depreciation, and at the bottom get the net income or loss. You then add (or subtract) that on your 1040. In the place where you used to take out the interest/ taxes on your primary home you still subtract out these expenses but for your new primary home. So you do still get all the expenses subbed out. Honestly your greater concern may turn out to be tenant problems, which can be daunting. If you are projecting a $500 loss right off the bat, with vacancy/ maintenance and repairs it will be alot higher. Still, if you are up to the challenge, best luck.

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I have about $40k in a very safe, short-term investment right now. i don't work, and have no credit. i do occasional free-lance stuff and am planning on more of it, but wouldn't count on more than $1k/mth for a while. my fiancé has a secure job; $80k/yr, and about $20k in debt. nothing too unusual. can we buy a (mediocre) car and $200k house? i'm after 'quality of life,' rather than a good investment. there are cheaper houses, but i'd rather keep renting than buy something too small. getting a less-than-ideal deal on a mortgage is not a big deal. the car, given where we'd move, is a necessity. should we stick with the rented apt, pay off the debt asap, and forget the house and car for the moment? i am horrible at saving, so there's a lot of appeal in even a lousy mortgage. there is enough in the bank for the expenses of a new home, though. (current rent is $900.) how realistic is a house & car right now, if 'quality of life' is the priority over $? (nb: in canada.)

The truth is you should buy the home because there's only so much real estate on this planet and they aren't making any more of it. That means the price will go up. This will provide you with quality of life longer than renting because once you buy the price doesn't go up like renting can.

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Ok. so here is my situation. i'm a 15 year old male, and i'll be turning 16 in june. my parents moved here to tomball (a small rural area in houston), texas a year ago in june 2009. now my dad, just because he wants to, wants to go back to miami, fl, back to the house we own over there. he wants to leave texas early june this year, once i finish school. my mom, my sister nor i want to move back. it’s just him, but according to the "pastor" of our church over there, he says we should move back and it was a mistake coming here. we are rented here and the rent is $1200 a month. our house over there is rented for $2,000 a month, yet the mortgage is only about $1,300, which leaves plenty of money left over for paying property taxes and other expenses. so anyway, he says that we don't have enough money to continue living here, but it’s mostly because he has turned into a lazy bum watching tv and doing absolutely nothing except watch tv and eat all day. all of this with the excuse of “we can’t make money because we plan to do a bankruptcy and if we make money, the bank will deny it”. we own a cleaning company, which provides services such as carpet cleaning, upholstery and tile and grout cleaning, and about another million things we do. hell, we have enough work to be making $300,000 a year (not exaggerating) my mom is fed up with him because he doesn’t let her go out and work either. so i was planning to move out once we got to florida and i had earned money over the summer before school started again and drive directly back to texas. i have talked it over with my aunt who lives not even a quarter mile away from our house here in texas, and she and my uncle decided that i can move in with them and my cousin, since they have 3 spare rooms. anyway, i have about $4,000 saved up from a pressure washing part time and count on another $2-3,000 from pressure washing during the summer. here’s the thing, i don’t want to move from texas to florida. i have friends, my girlfriend (i’d be devastated, we’ve been going out for a year).and all of my professors absolutely love me (not kidding). i have a car secured which i bought on a bank repo auction for $2,000 (2003 audi). i still have to pay that off. i’ll get my driver’s license once i turn 16. i’ve also talked it over with my mom and she’s not too happy about the idea but understands my motives and is willing to let me leave. i know my dad would have a fit if i moved out at 16, but here what i say: tough. there's nothing he can do to stop me....i think. it's my car, and my gas money which i worked and payed for myself, so he can't prevent me from leaving, am i right? the only actual expenses outside the regulars you’d expect such as a cell phone bill, groceries and gas money (keeping in mind that i won’t be paying for housing), is my gym membership which runs me about $90/month (i have a personal trainer), and my basketball coach (about $100/month) once i have about $5,000 secured at least i plan to leave florida and move back to texas just in time for when the school year begins. one question i have is that my dad un-enrolled me from this school (he went stated that i won’t be going to it anymore, and they gave him all sorts of paperwork) and enrolled me in the school over in florida so we don’t have to deal with any of that when we get there. if i were to continue going to this school i’d have to re-enroll, and show proof of residence and everything. now, i don’t want to get an emancipation or anything, i’d just be living with relatives other than my parents and sister. it’s not like i’m being abused or endangered. my parents love me, and i understand that. i plan to visit them every once in a while, and i plan to move back once i graduate from high school (i’m a sophomore now), since i intend to go to the university of miami, which my current girlfriend also plans to attend. i (think i) have the money to support myself for a good while, considering the fact that i have no housing costs. i also own my own pressure washing equipment, so i can work. i believe that i am mature and independent enough to go through with this decision. one of the questions i have is: since i don’t have an emancipation or anything, and my legal parents are living in florida, would i have any trouble enrolling back into my school with my uncle or aunt if they don’t have my custody, and i am only living with them, though no legal documents say so? also, do you think it’s a good idea that i move? if not, why? the only reason i mention the amount of money i have is so that people don't begin yelling at me that i don't have any means to support myself. working part time i can make $3,000 a month, because i have done it before. i am a straight a student. how am i throwing my life away by trying to stay at the same high school, with my girlfriend? i mention my car because i don't want anybody telling me that i wouldn't have any transportation. once again i ask, how is keeping my girlfriend of 14 months throwing my life away? how is keeping all my advanced placement and honors straight a classes in an ib school (look that up), throwing my life away. my school's test scores prove it. 92% ar at or above grade their grade level. to the school i have to go to, that number drops down to 43%! the school doesn't even have any honors classes (which looks very good on a college application)....i fail to see our point. and for the record, yes, i want to stick with my "girl". prick. our = your sorry about that.

it seems like you know what you wanted anyway, I think you should move out. :) good luck

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Sorry for the copy and paste, but i really need help with this: ok. so here is my situation. i'm a 15 year old male, and i'll be turning 16 in june. my parents moved here to tomball (a small rural area in houston), texas a year ago in june 2009. now my dad, just because he wants to, wants to go back to miami, fl, back to the house we own over there. he wants to leave texas early june this year, once i finish school. my mom, my sister nor i want to move back. it’s just him, but according to the "pastor" of our church over there, he says we should move back and it was a mistake coming here. we are rented here and the rent is $1200 a month. our house over there is rented for $2,000 a month, yet the mortgage is only about $1,300, which leaves plenty of money left over for paying property taxes and other expenses. so anyway, he says that we don't have enough money to continue living here, but it’s mostly because he has turned into a lazy bum watching tv and doing absolutely nothing except watch tv and eat all day. all of this with the excuse of “we can’t make money because we plan to do a bankruptcy and if we make money, the bank will deny it”. we own a cleaning company, which provides services such as carpet cleaning, upholstery and tile and grout cleaning, and about another million things we do. hell, we have enough work to be making $300,000 a year (not exaggerating) my mom is fed up with him because he doesn’t let her go out and work either. so i was planning to move out once we got to florida and i had earned money over the summer before school started again and drive directly back to texas. i have talked it over with my aunt who lives not even a quarter mile away from our house here in texas, and she and my uncle decided that i can move in with them and my cousin, since they have 3 spare rooms. anyway, i have about $4,000 saved up from a pressure washing part time and count on another $2-3,000 from pressure washing during the summer. here’s the thing, i don’t want to move from texas to florida. i have friends, my girlfriend (i’d be devastated, we’ve been going out for a year).and all of my professors absolutely love me (not kidding). i have a car secured which i bought on a bank repo auction for $2,000 (2003 audi). i still have to pay that off. i’ll get my driver’s license once i turn 16. i’ve also talked it over with my mom and she’s not too happy about the idea but understands my motives and is willing to let me leave. i know my dad would have a fit if i moved out at 16, but here what i say: tough. there's nothing he can do to stop me....i think. it's my car, and my gas money which i worked and payed for myself, so he can't prevent me from leaving, am i right? the only actual expenses outside the regulars you’d expect such as a cell phone bill, groceries and gas money (keeping in mind that i won’t be paying for housing), is my gym membership which runs me about $90/month (i have a personal trainer), and my basketball coach (about $100/month) once i have about $5,000 secured at least i plan to leave florida and move back to texas just in time for when the school year begins. one question i have is that my dad un-enrolled me from this school (he went stated that i won’t be going to it anymore, and they gave him all sorts of paperwork) and enrolled me in the school over in florida so we don’t have to deal with any of that when we get there. if i were to continue going to this school i’d have to re-enroll, and show proof of residence and everything. now, i don’t want to get an emancipation or anything, i’d just be living with relatives other than my parents and sister. it’s not like i’m being abused or endangered. my parents love me, and i understand that. i plan to visit them every once in a while, and i plan to move back once i graduate from high school (i’m a sophomore now), since i intend to go to the university of miami, which my current girlfriend also plans to attend. i (think i) have the money to support myself for a good while, considering the fact that i have no housing costs. i also own my own pressure washing equipment, so i can work. i believe that i am mature and independent enough to go through with this decision. one of the questions i have is: since i don’t have an emancipation or anything, and my legal parents are living in florida, would i have any trouble enrolling back into my school with my uncle or aunt if they don’t have my custody, and i am only living with them, though no legal documents say so? also, do you think it’s a good idea that i move? if not, why? ok, so one answerer began talking crap about me "throwing my life away" and my "bragging" at how much money i have and my car.....the only reason i mention the amount of money i have is so that people don't begin yelling at me that i don't have any means to support myself. working part time i can make $3,000 a month, because i have done it before. i am a straigh

Your aunt and uncle can get guardianship over you if your folks agree. Its not adoption or emancipation, it just means your aunt and uncle agree to take care of and be responsible for you. If you've been unenrolled from your school, you will have to have a parent or guardian reenroll you. Its understandable you want to finish school with your friends. As well spoken as you are, you should have little issue persuading at least one of your parents. You can google "guardianship forms texas free", download one, edit to suit your needs, print, have a parent and your soon to be guardian sign it, notarize it, and you should be good. Since you're staying for educational reasons, maybe you could add you can stay a long as you keep a certain G.P.A?

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Ok. so here is my situation. i'm a 15 year old male, and i'll be turning 16 in june. my parents moved here to tomball (small rural area in houston), texas a year ago in june 2009. now my dad, just because he wants to, wants to go back to miami, fl, back to the house we own over there. he wants to leave texas early june this year, once i finish school. my mom, my sister nor i want to move back. it’s just him, but according to the "pastor" of our church over there, he says we should move back and it was a mistake coming here. we are rented here and the rent is $1200 a month. our house over there is rented for $2,000 a month, yet the mortgage is only about $1,300, which leaves plenty of money left over for paying property taxes. so anyway, he says that we don't have enough money to continue living here, but it’s mostly because he has turned into a lazy bum watching tv and doing absolutely nothing except watch tv and eat all day. all of this with the excuse of “we can’t make money because we plan to do a bankruptcy and if we make money, they’ll deny it”. we own a cleaning company, which provides services such as carpet cleaning, upholstery and tile and grout cleaning, and about another million things we do. hell, we have enough work to be making $300,000 a year (not exaggerating) my mom is fed up with him because he doesn’t let her go out and work either. so i was planning to move out once we got to florida and earned money over the summer before school started again and drive directly back to texas. i have talked it over with my aunt who lives not even a quarter mile away from our house here in texas, and she and my uncle decided that i can move in with them and my cousin, since they have 3 spare rooms. anyway, i have about $4,000 saved up from a pressure washing part time and count on another $2-3,000 from pressure washing during the summer. here’s the thing, i don’t want to move from texas to florida. i have friends, my girlfriend (i’d be devastated, we’ve been going out for a year).and all of my professors absolutely love me (not kidding). i have a car secured which i bought on a bank repo auction for $2,000 (2003 audi). yet i still have to pay off. i’ll get my driver’s license once i turn 16. i’ve talked it over with my mom and she’s not too happy about the idea but understands my motives and is willing to let me leave. i know my dad would have a fit if i moved out at 16, but here what i say: tough. the only actual expenses outside the regulars you’d expect such as a cell phone bill, groceries and gas money (keeping in mind that i won’t be paying for housing), is my gym membership which runs me about $90/month (i have a personal trainer), and my basketball coach (about $100/month) once i have about $5,000 secured at least i plan to leave florida and move back to texas just in time for when the school year begins. one question i have is that my dad un-enrolled me from this school (he went stated that i won’t be going to it anymore, and they gave him all sorts of paperwork) and enrolled me in the school over in florida so we don’t have to deal with any of that when we get there. if i were to continue going to this school i’d have to re-enroll, and show proof of residence and everything. now, i don’t want to get an emancipation or anything, i’d just be living with relatives other than my parents and sister. it’s not like i’m being abused or endangered. my parents love me, and i understand that. i plan to visit them every once in a while, and i plan to move back once i graduate from high school (i’m a sophomore now), since i intend to go to the university of miami, which my current girlfriend also plans to attend. i (think i) have the money to support myself for a good while, considering the fact that i have no housing costs. i also own my own pressure washing equipment, so i can work. i believe that i am mature and independent enough to go through with this decision. one of the questions i have is: since i don’t have an emancipation or anything, and my legal parents are living in florida, would i have any trouble enrolling back into my school with my uncle or aunt if they don’t have my custody, and i am only living with them, though no legal documents say so? also, do you think it’s a good idea for me to move? if not, why? thanks for reading my rant, but i don't want an emancipation. i just want to move. my dad took it pretty well actually. i'm actually just moving in with some relatives. i don't want to become a legal adult at 16, i will still have caretakers. i just won't live with my parents. it's kind of like a friend of mine, who lives with her best friend, while her parents only live a few miles away.....

You need to talk to your mom and she needs to talk to your father. He needs to get his act together. The work is there, he just won't do it. The house in Florida is much more expensive then the one here in Houston, and it would be a financial mistake to leave here. If he files bankruptcy, you will lose the house in Florida. But for you- you cannot enroll in school without a parent or guardian enrolling you. Your mother can sign custody of you to your aunt and uncle to act as your custodian. Then, you are a legal resident of Texas and can be enrolled in school. But be prepared for your dad to put up a huge stink. I suggest a family intervention. Everyone needs to CALMLY talk to your dad. Tell them that none of you want to go back to Florida and you all want to make a life here in Houston. Hosuton has one of the lowest costs of living for a major city in the country! And Florida is alot more expensive to live in. You all need to talk about why he wants to move and weigh the pros and cons. This is a decision that affects the whoel family and he can't just make it on his own. If your mother really wants to put her foot down- she should let him go and stay here on her own. I'm not saying divorce- just not living together. The company is here and the work is there. She could work for and run the company and financially you all would be fine. He wants to go- let him go. Also remind him that the pastor's opinion is just that- an opinion. He does not have the authority to make choices in YOUR lives. He's a pastor- not God himself. And he is the only one that feels this move was a mistake.