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How does the RB take the mortgage interest rate deduction?

Home Forums General EHTrust/EHT Topics and Creative Real Estate Financing How does the RB take the mortgage interest rate deduction?

This topic contains 9 replies, has 0 voices, and was last updated by Avatar of propertydoctor propertydoctor 13 years, 8 months ago.

Viewing 11 posts - 1 through 11 (of 11 total)
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  • #2730

    What form does the RB have to take to their employer?
    What form does the RB have to fill out with me?

    Thank you.

    #18173
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    @propertydoctor wrote:

    What form does the RB have to take to their employer?

    Nothing, it has nothing to do with their employer.

    @propertydoctor wrote:

    What form does the RB have to fill out with me?

    Nothing with you.

    Just as with any homeowner and mortgage, the lender sends out the Interest Paid Statement to the owner. In this case it is the Trustee. The Trustee makes a copy for all Beneficaries and sends it to them. Who ever is entitled to the deduction takes it.

    If the RB is entitled to it (IRC 163 4(h)(d)) then they will take that to their CPA or Tax Preparer and apply it to their return.

    Let’s say the total deduction is $1500 per month of interest etc. That is
    $18,000 per year off their taxable income plus whatever other deductions they may have. Let’s say they don’t have any others and they have a taxable income of $60,000 per year. They now deduct the $18,000 so now their taxable income would be only $42,000 per year.

    If they wanted they can go to their employer and do a new W2 and claim more exceptions so that they could get some, if not most of that back in their monthly paycheck instead of having to wait all year for a return.

    Each deduction is now worth $3000 so that means they could adjust their withholding by 6 exception and have fewer taxes taken from their paycheck. If they are in a 30% bracket between State and Federal that would be an extra $6000 to $10,000 per year or $500 to $800 per month in their paycheck.

    Now I’m not an Accountant and each person and property is different. I would never try to figure for them what they may be entitled to. Have them go to their CPA and ask what their benefit would be of being able to take the Active Tax Write-off on that particular loan.

    Don’t ever advise them.

    Hope this helps a little.

    #18174

    Scott,
    Excellent explanation. Thank you!!

    #18175
    Avatar of rick
    rick
    Participant

    Does the RB get the deduction by verbiage we place in the Rider or is it automatic?

    Because the Settlor and the RB have an interest in the Trust, do they both get a 100% active deduction?

    Rick Archuleta
    925.455.0421
    brickyard1@hotmail.com

    #18176
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    @Rick wrote:

    Does the RB get the deduction by verbiage we place in the Rider or is it automatic?

    No there is no verbiage per se in the Trust docs. An RB is entitled to the Active Tax Write-offs as a matter of Law (i.e. IRC 163 4(h)(d))

    @Rick wrote:

    Because the Settlor and the RB have an interest in the Trust, do they both get a 100% active deduction?

    This is a much debated subject. Each recieves the Interest and Tax Notices. I would suggest that you give any advise in this area and simply have the SB or RB discuss it with their own tax advisor or CPA.

    #18177
    Avatar of rick
    rick
    Participant

    Scott,

    Thanks for the fast response.

    So when I’m talking with the SB and they ask if they still get the tax write-off, I tell them they still get to write off taxes and insurance, however they should check with their CPA.

    Then when I’m talking with the RB, I tell them they get to write off taxes and insurance too, however they should check with their CPA.

    Is this correct?

    #18178
    Avatar of rick
    rick
    Participant

    Woops, Taxes and Interest.

    #18179
    Avatar of mtnwizard49
    mtnwizard49
    Member

    FYI:

    #18180
    Avatar of rick
    rick
    Participant

    Mr Gary,

    Thank you. That explanation hit me right between the eyes. I will give it some thought as to how I will present it to the SB and then the RB. I will also talk to a Tax Attorney and CPA to help me make the decision as to how I will make my presentation.

    thanks Gary,

    #18181
    Avatar of scott_l._moyes
    scott_l._moyes
    Participant

    @Rick wrote:

    Mr Gary,Thank you. That explanation hit me right between the eyes. I will give it some thought as to how I will present it to the SB and then the RB. I will also talk to a Tax Attorney and CPA to help me make the decision as to how I will make my presentation.thanks Gary,

    Do not start complicating a really easy process. I don’t explain any of it. If they ask about taxes I just tell them to talk to their Tax Advisor, period. I don’t say yes, I don’t say no, AND I DEFINATELY DON’T “PRESENT”.

    What Presetation? If you are making a “Presentation” you are SELLING. Don’t Sell, just make the damn offer. If they ask questions, answer them, nothing more, nothing less. But DON’T PRESENT ANYTHING.

    I sometimes wonder what the Flip Chart and Powerpoint are for, the Seller, the Buyer or YOU… the Investor.

    Just make your offer using the Proposal Template and answer their questions. The minute you start selling, you lose. And don’t just send an offer to someone because they told you to send something or some information. The only information you need to send it the offer.

    #18182
    Avatar of rick
    rick
    Participant

    I’ve been a member for 5 weeks Scott, and I’m still working on reading and listening to all the tapes. The tax area is something that has had me a little confused because of information I have received and have probably assimilated incorrectly. After going over yours and Gary’s post, looking at the flip chart and talking with an Estate Planning Attorney, I can see the mistake I was making.

    Thanks for the advise.

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