Landlord Tenant Issues With Rental Property and Taxes

Many investors took advantage of the lower prices for real estate in combination with the lower interest rates and purchased investment and rental property. Unlike in the past, the lower rates and prices promise a faster return on their investment, with equity returns sooner rather than later.

If this is your first turn as a landlord, there are some tricky tax situations that you will need to pay attention to during your first year. Even a seasoned landlord will have to keep well informed of the various tax changes from year to year.

For instance, any rental income that you receive for the year will need to be included as income. This amount will include any deposits, non-refundable deposits, first and last month's rent, and any advance rent payments. It doesn't matter when the advance payments are for, you must count them for the year you received them.

Some items that may be a little trickier are items that your tenant does to maintain the property for a discounted rental amount. You still have to claim the value of the task performed as income, and then deduct it as well as an expense. You must also claim as income any expenses paid by your tenant. If your tenant deducts the amount from their rent, you will need to claim the full rental amount, and then deduct the expense.

A less common situation is where a tenant may pay you to exercise an opt out clause in a lease. Again, this is rental income, as are lease with option to buy option payments.

Two small tax breaks are included for renting out space in your residence. You needn't disclose the rent you receive, as long as it is for less than 15 days.

These are the places that the IRS loves to catch people cutting corners, so do yourself a favor and give them no reasons to dig deeper. Consult your tax professional and your real estate attorney for advice in all legal tax and landlord tenant matters.

------------------------------------------
Crowley & Cummings are real estate attorneys located in Dedham MA specializing in real estate closings, title examinations, complex title issues, purchase & sale agreements, condo conversions, and other related services. They service lenders and mortgage brokers, real estate agents, as well as buyers and sellers in Massachusetts, New England, and throughout the US. To learn more visit them online at www.CrowleyCummings.com.

MA Title Search and Closing Costs

Whenever anyone buys or sells real estate, and uses any kind of mortgage financing, the mortgage company will require that a title search is performed before an approval will be granted for the closing to occur.

The purpose of a title search is to enable the company providing the funding for the property to be certain that they will own the property outright if you should default on your mortgage payments. In order to do this, the mortgage company or finance company first needs to determine that the property is free from all liens and encumbrances of any nature that could effect the sale.

The main focus of a title search is to satisfy the criteria of whether the property is free of liens, whether the seller has the legal right to sell the property, and whether there are any restrictions on the property such as easements, or land use allowances.

The cost for a title search is included in your closing costs, and the closing will generally not proceed without a clear title.

Your MA real estate attorney will be able to walk you through each closing process and cost and give you the answers to any questions you may have about the procedures being used at your closing.

If you are considering the purchase of real estate in Dedham MA, contact the Real Estate Law Firm of Crowley & Cummings LLC for expert and timely advice and counseling.



---------------------------------------------------------------------------------------
Crowley & Cummings are real estate attorneys located in Dedham MA specializing in real estate closings, title examinations, complex title issues, purchase & sale agreements, condo conversions, and other related services. They service lenders and mortgage brokers, real estate agents, as well as buyers and sellers in Massachusetts, New England, and throughout the US. To learn more visit them online at www.CrowleyCummings.com.