DEAR BOB: I bought my first house in 2005. My partner lives in it with me, but the mortgage and title are in my name alone because I have better credit. My partner gives me money each month to go toward paying the mortgage. Is this considered rent and therefore taxable? –Clarissa P.
DEAR CLARISSA: From your description of the situation, it appears the money you receive from your partner is rent that you should report on Schedule E of your income tax return.
Purchase Bob Bruss reports online.
Because the house is in your name alone, and you are not married to your partner, you are then entitled to depreciate part of the house rented to your partner. Also, you can deduct part of applicable expenses such as part of the insurance and household repairs on Schedule E.
Unless your partner is legally obligated to pay half the mortgage payments and property taxes, I don’t see how your partner is entitled to itemize income tax deductions for the payments made to you.
You and your partner should discuss this situation with a local family law attorney and your tax adviser, to see if you want to make changes in the arrangement.
QUIET TITLE LAWSUIT DECIDES WHO OWNS WHAT INTEREST
DEAR BOB: My friend was added to the title of his parents’ house deed at their request. They wanted the house to remain in the immediate family. This was done shortly after his mother passed away. Several years later, his father created a revocable living trust and converted his half of the ownership to tenant-in-common with his son. Now the father has filed a quiet title lawsuit, alleging he did not understand he was signing away half of his home. My friend is aware someone is influencing his father to gain control of the house, probably the granddaughter who is named as successor trustee of the living trust. What are chances of my friend prevailing in court? –Elva M.
DEAR ELVA: Unless the father was mentally incompetent or under duress at the time of deeding half of the house to his son, if the deed was properly executed, the chances of “undoing” it are not good for the father.
However, the father did have the legal right to put title to his half of the house into a revocable living trust, thus creating a tenancy-in-common with his son. A quiet title lawsuit will determine the property rights of each co-owner. Of course, the son should retain a local real estate attorney for personal legal advice.
LICENSED SURVEYOR SAYS SURVEY OFTEN SHOWS FALSE ENCROACHMENT
DEAR BOB: In your recent article about an alleged encroachment, the writer of the letter was apparently “told” his fence encroached on the property line. Who told him? While we cherish the right to have opinions on virtually any subject, only a licensed land surveyor can determine the exact boundary. In my land surveying business, I find only about 10 percent of the time when people claim an encroachment are they able to show documentation of a survey by a licensed surveyor. Without such documentation, I would not recommend a home owner spend much time or money on the dispute –Lewis S.
DEAR LEWIS: Thank you for your expert opinion with which I fully agree. Adjoining property owners often are reluctant to spend a few hundred, or even a few thousand, dollars to hire a licensed surveyor to determine the exact boundary.
However, and perhaps you have seen a similar situation, I recall one circumstance where two disputing neighbors had two surveys prepared by licensed surveyors that showed a boundary different of almost 18 inches. The problem was a very steep rocky slope and the starting point of the survey was unclear. Yet the difference was really unimportant because neither neighbor could use the disputed area; yet they refused to resolve their dispute.
The new Robert Bruss special report, “How to Earn Your First Profit When Buying Your Home or Investment Property Right,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet PDF delivery at www.bobbruss.com. Questions for this column are welcome at either address.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
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