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Renting To Spouse
Q:
Question:Selling a home that is used for rental and exchanging to another home for rental, using the 1031.In this case, husband owns the property and resides in another residence in another town. Wife lives and works in the town where new rental isacquired.Is it possible to rent out the newly acquired property to the wife who has no financial interest in it and files separate federal and state income tax returns? Would this meet the requirement of being a rental?
A:
That could work. You will need to be sure to charge a fair market rent, which you will report on Schedule E of your 1040. Your wife will also need to book her payments as rent and not as something else, such as mortgage interest.
You also need to know that the home will not qualify for the tax free residence sale while it is considered a rental, by either you or your wife.
Your personal tax advisor should be able to give you more guidance.
Good luck.
Kerry Kerstetter
Labels: 1031
- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 7/24/2005 07:13:00 PM Send this post:
