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Author Topic: Sub2 tax question...who gets the tax benefits?  (Read 1668 times)

Offline JohnandLela

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Sub2 tax question...who gets the tax benefits?
« on: February 22, 2007, 12:05:53 am »
I know this is a rookie question...My first Sub2 is coming up next week. My goal is to do a lease option on the property once I get the docs signed.

My question is...Who gets the tax write offs/benefits at the end of the year? Me (the equitable owner) or the legal owner (the one carrying the debt)? Did I say that right?

Thanks in advance for you coaching!  :help

Offline GOD WNZ

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Re: Sub2 tax question...who gets the tax benefits?
« Reply #1 on: February 28, 2007, 12:08:34 am »
The legal owner will still get the depreciation and associated tax benefits. You will end up reporting your monthly income from the sublease as earned income and pay accordingly. If you purchase and sign the lease in your LLC you will have different tax consequences plus additional legal protection from a slip and fall claim from your tenant. I am not a lawyer or accountant, see yours for details related to your transaction, hope this helps :biggrin
Creating and Retaining Wealth Through Real Estate

Offline Enjoidc

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Re: Sub2 tax question...who gets the tax benefits?
« Reply #2 on: February 28, 2007, 02:16:02 pm »
Q.  If you went before a judge, what would he declare?

A. You are making the payments, you get the deduction.

This question works for a lot of things in real estate.

Offline GOD WNZ

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Re: Sub2 tax question...who gets the tax benefits?
« Reply #3 on: February 28, 2007, 11:30:54 pm »
Sorry, I miss read your question, When you take deed sub2, You are now the legal owner and you get the tax bennies. When you buy lease/op you are a tenant till sale closes therefore no tax bennies... :banghead2
Creating and Retaining Wealth Through Real Estate

Offline Enjoidc

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Re: Sub2 tax question...who gets the tax benefits?
« Reply #4 on: February 28, 2007, 11:48:45 pm »
Ah, simple mistake. 

I am personally just looking into lease options. That saved me a question!


 




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