Property/Re-Fi/Tax Write off
Before I go pay for a lawyer, let's see what some TBN'rs think.
I purchased two (2) seperate, 5 acre lots this year. They do not adjoin, but are in the same "subdivision". They were "owner finaced" meaning the developer holds the note. I hold title to each property with the developer as the lien holder.
I offered my in-laws the opportunity to purchase and place a mobile home on one of the lots. They currently live in a nice mobile home community. However, the lot rent continues to rise every year and is about to be raised to $300. I will not charge any property rental and will have a nice place to stay when I visit my tractor which already lives there.
Question: What is the most financially productive way to work this out for me? Do I charge rent (one dollar a month) and write off as a rental property? My father in law even suggested that he would "give" me the mobile home so that I could write the place off as a second home. Is it possible to be a co-owner of the mobile home while still being the sole owner of the property? Is there any advantage to that?
Does anyone have experience with re-financing of un-improved lots as that is one of my goals to lower my monthly costs. Can it be re-fied as a rental property? Or does the property have to be residential?
My goals are to:
1) Maximize the tax benefit from these properties.
2) Re-Finance to a lower rate.
Re: Property/Re-Fi/Tax Write off
First of all, you cannot write the interest and real estate taxes off if you are just charging a dollar a month for rent. You will have to charge fair market rent to be able to write off the expenses. This would more than likely be more than the interest and taxes.
Your best bet would be to have them own the mobile home and put it on your property and if you can stay there when you want treat it as a second home and write off the interest as a second home. You could still put the taxes on schedule A as a itemized deduction along with the interest.