All Forum Posts by: Yan Gao

Thanks for your further elaboration! The information is very helpful. Agree the case should be communicated with a CPA in detail.
I have contacted local CPA and will consult them soon.

Regards,
Yan
Originally posted by @Ahad Ali:

@Yan Gao

To answer your question regarding filing separately, you can. Each of you will need to show that you lived at separate locations for at least 6 months of the year. As for the properties, if only one unit is being rented out then only that units worth of expenses can be claimed. For example if you have a 2 unit property and rent out 1 unit while living in the other, the expenses for the rented out unit can be written off as expense but the other unit can not as it is personal use.

As to which route would be better for you to file as, Joint or Separate, I highly suggest speaking directly with your Accountant/CPA as there would be more variables to discuss about before deciding which would be the best option. Its rather difficult to advise which route solely based on what was provided on this forum and you can not go into further detail here.

Keep in mind this forum is for general advice and you should not move forward solely with the information found here without speaking to a professional first as they will know the details surrounding you and can provide more tailored advice. 

Thanks for your suggestions!
What will happen for 2021 tax if we have house A in Washington and house B in Arizona, both rent out one room for 6 months in 2021?
Hypothetically House A will have paid 12 months mortgage interests, one year property tax, and earned 6 month rent (one room).
House B (close in Feb) will have paid 10 months mortgage interests, 10 months property tax, and earned 6 months rent (one room).

Would it make most tax return if we file 2021 tax jointly or separately?
The hope would be deduct mortgage interest and property tax for both house A and house B.
Will the rent income be taxed with highest income tax bracket?

My wife will work in Arizona so hope can claim house B be also primary residence.

Regards,
YG


Originally posted by @Ahad Ali:

Hi Yan Gao,

Yes, you guys can file a joint return as long you put the same address because technically in 2020 you guys lived together and you guys are planning to buy the house in 2021. For the Phoenix, AZ house you guys can show the rental deduction for the 2021 tax return, and for the 2020 tax return, you can't deduct anything as you guys will purchase in 2021. And, if you guys file a Separate return in 2021 then both of you can't show the Phoenix house in the deduction, only your wife can show the deduction but if you trying to file jointly then yes technically both of you are showing the deduction.

Thanks for sharing your experience and suggestions. We do think there is something missing in our plan and CPA sounds like the missing knowledge. We will consult one and come back with what we found out.
Yan

Originally posted by @Colleen F.:

@Yan Gao  we have done this a few times for 6 months or longer with young kids and teenagers, not sure which is harder. Consider realistically how long you can do this.  You can buy a home in the phoenix area, usually second home interest rate but you might get owner occupant rate if your wife claims it as her state of residence. Whether you can deduct interest for both depends on how you handle your residency. You can file separately or together but that mostly is a question for a CPA, you will need to file state tax in both states and likely wind up paying the higher state tax in our experience.  Yes you can rent rooms in both places for income but that will complicate your taxes more so consult a CPA. Generally think of income as being tied to the place it is earned but the resident state may have some claim on it too.   Realistically renting or owning depends on the long term plan. I would seriously consider consulting a CPA on the tax questions.  Have your wife rent short term in the meantime.