Am I making sense?
My wife is a non-resident alien and our family of four live currently overseas. I own a mortgage-free property in CA and it is used as a rental. We file tax seperately, in other words she doesn't pay US tax on her income. And my tax pay to IRS is minimal since I am not working.
We are thinking about buying a second property in southern CA as an investment/rental as we probably won't move back to the States in the immediate future. We will get a mortgage loan about 400K, with down payment roughly the same amount - mainly from her saving). Is it correct that we/she won't get the benefit of deduction on real estate tax and mortgage interest payment because it is rental and her status, right?
- What would be the tax concequences for me and my wife's taxes then? Is she subjects then to IRS and CA-State tax and need to file tax?
- The main idea is profit from the current buyers market. Is this a SILLY idea? Or should we only consider this after we move back in 3 to 5 years?
Thanks!