Legal Question in Real Estate Law in California

I have a condo that we rented to a extended family member 2 years ago. She got laid off in December and my husband and I have been trying to do both our mortgage and the condo. Finally April of last year we told her we could not do it anymore and she would have to move. We were shocked she was upset with us and said family does not do this. She finally got out 3 weeks later and when we went in the place was trashed. My husband and I were going to have to do a overhaul and felt the money we had to put into was not worth the value on the condo and what we owed. So we turned it over to the bank. When we did our taxes we claimed to rental income but I told my tax consultant we paid for the first 4 months the mortage and the HOA. She said that does not count because it is not income we paid it. So it is a lost. She told us to keep paying the HOA until we are for sure the title is out of our name. Now here is the question my Aunt told me that she was talking to Kathy who rented my condo and she said "SHE GOT EVEN WITH US for throwing her out" that she claimed renters credit for the year and that we are going to be audited now and have to pay big bucks!!! because the IRS is going to see that. Wouldn't the proof of burden be on her? Because she did not give us a cent!! I would call my tax consultant but she just left to Hawaii for a much needed vacation :o) Thank you for your time...


Asked on 4/17/11, 8:36 am

1 Answer from Attorneys
George Shers Law Offices of Georges H. Shers

There is no Federal renter's credit so there is nothing that the IRS, as opposed to the Franchise Tax Board, will hear about. Even if there were, few returns are ever audited. You appeared to have under reported your deductions. That you do not have a rent paying tenant in the units does not mean you can not subtract any HOA fees or other expenses you actually pay for. Had you merely had a tenant who left and it took a month to get another renter in, does your tax consultant claim that you could not deduct as an expense for a rental property the amount of home owners monthly payments made? If so, fire that person as they do not know the law.

As for Kathy, ask, with the Aunt listening in, whether she really said what it is claimed she said -- i.e. that she committed tax fraud. you will then have to decide whether you want to inform the tax authorities of that.

Read more
Answered on 4/17/11, 5:04 pm


Related Questions & Answers

More Real Estate and Real Property questions and answers in California