Homestead tax exemption
What advice would you give someone who owns a property but does not live in it. The owners address on their drivers license shows the property address and voting card shows that address. However, the own did rent this property out while they were living elsewhere to pursue other interests. The owner did claim the homestead tax exemption for the last 4 years and was granted it until recently. The courthouse has asked for 2 years of back tax returns. The returns show that the home has been used as a rental. The house is not financed as a rental nor is it insured as a rental. The owner had originally intended to move back into the home after 4 years (the lease is up in July of this year) but has decided to stay local... just not live there for financial reasons. As a result, the owner has been hit with a 12k tax bill. Before paying the bill, the owner wanted to know if there was any legal way to reduce the tax burden provided the facts above. The owner never intends to move back to the home at this time but knows that because of the location, this is a great asset to have. The owner also doesn't not wish to sell because they are lead to believe that since depreciation has been taken, that a portion of the gain would be lost back to the government. Is this true? The house could possibly make 100k in the sale of it. The owner is wondering how people have multiple rental properties and not get buried in those property taxes because it is not their primary residence. The owner cannot raise the rent to cover the cost. The rental monthly price is already at the top of the tier for the area. Because of HOA dues every month, the owner ends up paying more than what they collect. The owner has never had a profit over the last 4 years. Should the owner refinance the house as a rental and would that help moving forward to reduce the tax burden? While they don't plan to move back into this home, they don't know if it would be a rental forever either. I guess it would be whatever makes the most financial sense. Thank you!