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Can RB take active deductions w/o trust in place…

Home Forums General EHTrust/EHT Topics and Creative Real Estate Financing Can RB take active deductions w/o trust in place…

This topic contains 6 replies, has 0 voices, and was last updated by Avatar of red12 red12 13 years, 8 months ago.

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    Avatar of red12

    Here’s the deal. It’s taken NARS months to get a trust created (that’s a whole different topic). During that time my RB was paying a higher than market rent in anticipation of the tax deductions he’d be eligible to get.

    W/O the trust created, if I could obtain the 1099 from the SB could the RB still claim the active deductions? Would the IRS know or care?

    Avatar of megkelly

    It’s my understanding that it’s the triple net lease that allows them to take the deductions. So if you have them in on that, you’re probably ok. Good question for one of the NARs guys…


    Avatar of joecain

    Hi Richard -

    I appreciate your very active participation on our website Discussion Board over the last year or so and thank you for your desire to acquire more info on how we do what we do. I know that you are living in and serving a Community that sure could use good people like you to work with.

    I will allow other, more knowledgeable persons to address your tax deduction question.

    My attention was grabbed by your comment that somehow NARS has been slow on generating Docs for a Trust for you. Honestly, any reference that we might have dropped the ball for your deal will get my attention every time. Transactions do occasionally fall through the cracks and delays do sometimes occur, but you have my word that we work really hard in the Documentation Department to ensure that those times are rare.

    Since reading your post, I have checked every system possible on my end of the computer line and nowhere do I show that you have ever actually Submitted a Trust for us to generate Docs. I do show an abandoned record (Trust #2503694) dating back to 03-20-07, but no info was ever Submitted. In fact, there is nothing but a Trust Number shell of a record. No Trust Name, no property info, no beneficiary info, not even yours.

    If I am mistaken about your having Submitted a Trust for Document generation, please contact me directly at the NARS Office and I will help you to complete your transaction. We are responsive and pro-active whenever possible.

    In fact, if any other Documentation clients out there reading this post believe that NARS has dropped the ball on a current or recently Submitted transaction, please do not take the time to post it here. Contact Mark or myself at the NARS Office directly via email or phone and we will be happy to research this for you and work with you to generate your Trust Docs in a timely fashion.

    As always, let us know how we can assist in your success.

    Avatar of jim_pasquini

    You can deduct anything you want on your taxes. It only becomes a problem if you’re audited.

    Avatar of red12


    Sent you an e-mail.


    Avatar of red12

    @jim_pasquini wrote:

    You can deduct anything you want on your taxes. It only becomes a problem if you’re audited.


    That was my thinking as well. Even with the trust in place, the RB only gets a copy of the SBs 1099. He won’t get one in his own name either way.

    Avatar of dkrueger

    I hope in this case I’m wrong, but I believe the RB needs to have a beneficial interest, i.e. at least 10% ownership of the property before they’re allowed the tax benefit. I wouldn’t promise them that until the trust is completely in effect.


    Avatar of jim_pasquini

    Don’t promise them anything. Tell them to consult their tax guy. You aren’t their expert.

    Under IRS regulations you need to 1) have a title interest in the property, or a beneficiary interest in the trust that owns the property, and 2) have the risk and burden of ownership.

    If you don’t have 1) or 2) you can still write it off, but it may not stand up to audit scrutiny.

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