All Forum Posts by: Luna B.

I bought a rental property in Clearlake Ca in 2004 for about $125,000 ( A house and studio)
I now owe $95,000 on a 1st at 6.25%. Citimortgage
If the house was all fixed up I might get the $95,000, but it is in need of ALOT of repair,
and the neighborhood is horrible. In it's current condition I might get 65,000 for it??? Hard to say.

I bought this property as a flip, and the market crashed while I had it listed, so I've been renting it and waiting for the market to come back for about 9 years.I have had to deal with evictions, drug dealers, city code enforcement closing down, and now a mice infestation from the neighbor letting garbage pile up in their yard.
I want out.
After evicting a tenant from the house years ago, the place was trashed and I rented it to someone "as is" in exchange for lower rent. I turn the other cheek as to what "business" he does there....I have been collecting rent from the house and the studio, and break about even money wise, but I do not want this property in my life anymore, and I worry about the liability.
The options I am considering are
Finding a buyer and paying off the difference out of pocket...ouch!
Doing a short sale
Foreclosure
I am not horrified at the thought of ruining my credit...the thought of trying to list it for sale and have the tenants cooperate with showing it sounds daunting.
Advice?
I am not confident I understand the law in California for deficiency protection . I don't think I am protected since it was an investment property, and is it a real risk that they would sue?
What is my best bet at convincing them to do a short sale since I don't have financial hardship?
Cancellation of debt income? Will I be given a 1099 in a short and a foreclosure, and would the loss on the investment offset it? (My adjusted basis is about $98,000 right now)

Thanks for any help!

I bought a rental property in Clearlake Ca in 2004  for about $125,000 ( A house and studio)
I now owe $95,000 on a 1st at 6.25%. Citimortgage
If the house was all fixed up I might get the $95,000, but it is in need of ALOT of repair,
and the neighborhood is horrible. In it's current condition I might get 65,000 for it??? Hard to say.

I bought this property as a flip, and the market crashed while I had it listed, so I've been renting it and waiting for the market to come back for about 9 years.I have had to deal with evictions, drug dealers, city code enforcement closing down, and now a mice infestation from the neighbor letting garbage pile up in their yard.
I want out.
After evicting a tenant from the house years ago, the place was trashed and I rented it to someone "as is" in exchange for lower rent. I turn the other cheek as to what "business" he does there....I have been collecting rent from the house and the studio, and break about even money wise, but I do not want this property in my life anymore, and I worry about the liability.
The options I am considering are
Finding a buyer and paying off the difference out of pocket...ouch!
Doing a short sale
Foreclosure
I am not horrified at the thought of ruining my credit...the thought of trying to list it for sale and have the tenants cooperate with showing it sounds daunting.
Advice?
I am not confident I understand the law in California for deficiency protection . I don't think I am protected since it was an investment property, and is it a real risk that they would sue?
What is my best bet at convincing them to do a short sale since I don't have financial hardship?
Cancellation of debt income? Will I be given a 1099 in a short and a foreclosure, and would the loss on the investment offset it? (My adjusted basis is about $98,000 right now)

Thanks for any help!

I am wanting to update my tenants leases. I don't think the ones I have been using have enough rules on them.

Does anyone have a lease they use that they think is really good that I could have a .pdf?

Most tenants started off as a 6 month or 1 year, and are now on a month to month basis.

I am in California.

@Linda Weygant 

Linda, I know you're not suggesting that.
And yes, I will be spending any money this year that I can for see having to spend
in upcoming years...as long as I can write it off :-)
Which in my case, leaves pretty much just the under $500 rental expenses/improvements.
The tax rules about contributing to retirement when you only have rental income suck,
and, I suppose it's a fair trade off for no self employment tax, and depreciation :-)

@P.Martin

I am paying attention to the marginal rates, and I'm not trying to earn less money, I am asking about deferring income.
I also think it's crazy when people suggest spending unnecessary money to lower tax rate.
I will make sure to do as many repairs and improvements under $500 that can be expensed, (the 2% limit rule on the safe harbor won't allow me to do a whole lot more)
I don't file Schedule A, so no on the donations, I am not eligible for an HSA, or any retirement contributions.
Don't have any dependents, and you cannot rollover non-spouse inherited annuities.

@Linda Weygant

Thanks for bringing up constructive receipt.
Just to make sure I understand correctly,
When a tenant paid their January rent in December, I have claimed it for the prior year as it was received during that year.
If a tenant is late with their rent, or gives me a post dated check, I do not claim the rent until it is received or deposit able, right?

Thanks everyone, I appreciate all the feedback.
To be more clear. I have a one time taxable event with an inherited annuity in 2015
that will bump me into a higher tax bracket than usual.
I am trying to defer income and increase expenses for 2015 to get myself back into my usual tax bracket.
I can afford to take a hit from this in 2016, as I will stay in the lower tax bracket.
As far as I know, I don't have the option of any retirement contributions from rental income,
and I don't have any other income that qualifies.

This article seems to confirm what I thought was legal to do.
Postpone Income/Accelerate deductions

@P.Martin this isn't lowering my income, it is postponing if for one month to put it into the next tax year. If the income is claimed it is not tax evasion.

I need to lower my rental income for this year due to some other income coming in.
I know I can prepay certain expenses at the end of the year since I do cash based accounting. Now I am wondering if would work to have my tenants
post date their December 2015 rent to be Jan.1 2016.
I realize this would make my rental income higher for 2016.