So I am attempting to complete the profile and I fear I have missed a deadline because I am highly confused about the taxes information. Both of my parents are not fluent in English and one parent isn’t here at the moment so it is very difficult for me.
On to the questions:
What exactly is the difference between Amount owed on home and Amount owed on the primary mortgage for this home? I have an amount for the first one and my family is confused on the second one so I’m not sure if I put the same amount because they don’t know about another amount and the Profile is still a bit confusing in its explanation.
Also, we own a small business and when reporting this information I am confused on what “Parent’s portion of the gross receipts for this business in 2017” is? It says to look on a certain section of the taxes but on the line it points me to it speaks of the taxes on a rental property we own and not the business itself so I don’t know if that would be the correct information? Or maybe it also applies to the business and the rental property but all it says is “Total expenses” and this information is part one while part two is the actual business. I am highly confused.
Thank you ahead of time.
Some folks have more than one mortgage on their home. For example, they may have a home equity loan in addition to their first mortgage. So the “amount owed on home” would be the sum total of all mortgages, and the “amount owed on the primary mortgage” would be just that. If your parents have only the one mortgage loan on their home, then the answers to both questions would be the same.
Sorry, I don’t know the answer to your second question but someone else will chime in with help.
So my parents had a home equity loan, a line of credit at around $70,000 and what is owed on the house right now is about $06,000. However, the line of credit was already paid off. So since it was paid off does it factor in to any of the values? How would Amount owed on home and Amount owed on the primary mortgage for this home look in that case?
Also, if you happen to know the answer, do you know what it means by taxable income? Would a paid off rental property count or no?
Paid off loans don’t factor at all except that if theynwere NOT paid off, you home equity would be lower.
Of you only owe $6000 on the house…that is what you owe on it…period.
Your taxable income is what you earned and paid taxes on.
@BelknapPoint the sale profit from a rental…would that be untaxed income…or is it reflected elsewhere. I don’t believe it is taxable income.
It would be helpful if OP explains what she means by income from a “paid off rental property.” Rental income? Capital gains realized from the sale of real estate that was used as rental property? Something else?
Oh yes by that I meant we have rental property that is paid off and I’m asking whether that income we get from renting would count. I am assuming no?
Okay so considering it is paid off then I would have the same value of $106,000 (forgot the 1 in the previous message) for amount owed and primary mortgage, correct ?
The value of the rental property counts and any income generated is included. Why wouldn’t that count as income?
So I would include the amount earned from the rental property as “Other taxable income”? The side bar describes it as “Enter the total amount of other taxable income, including interest and dividend income the student’s parents expect to report on their 2018 income tax return” I’m just not sure what it means.
No. If the property is paid off, there is no amount owed and no primary mortgage. The current fair market value of the property would be reported as equity in the property.
The amount earned from the rental property is taxable income. If there’s no separate question asking about rental income, it seems like a question asking about other taxable income is a good place to report the rental income.
Oh I mean considering the line of credit is paid off but we still owe $106,000 on the house. And thank you!
@bluejay7queen
You are mixing up two different issues.
Money you owe on your mortgage or money you have paid off on your mortgage are NOT income.
Money you get from rents on rental properties IS income.