Tax Implications

[Tim5055]

Opps - guess I should have specified that Brainpause and I both live in TN where sales tax is now deductable.  Tim - you are correct, the advice of professional tax preparation folks is always the best way to go...

Donsn't TN have a state income tax?  

If so, wouldn't you wan't to deduct it rather than the sales tax?

Now I'm confused
 :confused:

[beacher]

Hmm???  So, if I rent out my "second home" can I then deduct all the maintenance and upkeep, being that it will become an income property.  How about if I sublease it with a "subject to" clause, and get someone else to pay for it too!  Wow!  The wheels are spinning!

[Tim5055]

OK, I went back to my tax guide.  TN limits income tax to "Dividends and Interest Income Only"; so when making a large purchase the sales tax would be the preferable tax to deduct.

So, I guess this law affects more folks than I originally thought. :#

[Tim5055]

Hmm???  So, if I rent out my "second home" can I then deduct all the maintenance and upkeep, being that it will become an income property.  How about if I sublease it with a "subject to" clause, and get someone else to pay for it too!  Wow!  The wheels are spinning!

Once you rent it out, you really don't get the "second home mortgage" deduction anymore, you get to deduct "expenses" related to your income producing property.  Remember, once it becomes a rental property there are limits on how much time you can spend there before the IRS denies the deductions.

Many folks who own their own business rent or lease land/buildings back to themselves for tax purposes.  It can really get convoluted.

This is really a time to talk to a tax professional!

[brainpause]

Donsn't TN have a state income tax?  

No...

[NCSunshine]

Opps - guess I should have specified that Brainpause and I both live in TN where sales tax is now deductable.  Tim - you are correct, the advice of professional tax preparation folks is always the best way to go...

It is true that you can elect to deduct sales tax, but it is only worth it if you paid more sales tax for the year than you paid state income tax.  You can't do both.  For the states with no state taxes this is a great new deduction.