Can anyone help with a Real Estate asset questions? My Dad passed away almost 2 years ago and left his house to me and my 2 siblings. I have no controlling interest. My share is valued at $275,000, however I received a K-1 from my brother with a 10,000 loss. I do not receive any annual income from this assest. How do I account for this on the CSS.
I don’t see this as a Real Estate Investment. Am I correct?
Thank you,
You have part ownership in a piece of real estate wherein your share is worth $275000. How is that not a real estate investment? Is this your primary residence NOW? If not, what is it? A rental? Your siblings live there?
It is not a primary residence, is that right? Do you get any rent from it?
I would think it would be listed as an asset with the value of your share. You can explain at the end of the CSS where there is a space for special circumstances.
You can also call admissions/financial aid and ask.
If this is not your primary residence…it will also need to be listed on the FAFSA when you complete that.
If it’s your primary residence, it will not be included on the FAFSA.
Is the property fully paid for? You say there was a $10,000 loss…could you explain that?
A $10K loss makes it sound like a rental. Yes it’s an asset.
I have seen some family groups put a co-owned piece of property that is not rented out (such as a shared vacation cottage) in an LLC and then the Sch A deductible RE taxes and mortgage interest flows through on a k-1.
Thanks for the input. It is not my primary residence. It is a rental in disrepair. (4 units) One sibling lives there.
He took out a home equity to repair it $160,000( divided by 3 siblings). Hopefully the units will rent but in the meantime I will get another K-1 for a loss this year. Not sure how much yet.
Yes - this is an asset for financial aid purposes and the loss which is likely depreciation expense and mortgage interest is probably added back to income for financial aid purposes.
^If it isn’t rented during the year, there won’t be any income. In general only certain things like depreciation might be added back in. Not interest or repair/maintenance costs or property taxes. There is the matter of the net equity being an asset for you, however.
If the unit isn’t rented then interest, repair and taxes aren’t deductible either.
^Not necessarily true. Citation?
^ Sorry I was unclear. If there is no income those cannot be deducted from the income.
http://www.irs.gov/publications/p17/ch09.html#en_US_2014_publink1000171661
You can deduct the losses, but the losses may only be used to offset income from other passive investments. Alternatively, you can carry the losses forward, and use then to offset any future gains, including capital gains I believe. This is really the realm of an accountant familiar with how these write-offs work. Also, what counts for FAFSA is the equity you have, not the total value of the asset. Given that you have a non-controlling interest with debt, its value is likely significantly less than total value of the asset divided by your share of ownership.