real estate tax help?

[Lithium381]

I purchased a property originally as an investment property. We've now moved into it. What do i need to do in order to claim it as a primary? Do i need to refinance? Can i simply start claming it on taxes?

State in question is TX

 

[OCGuy]

You should have previously been claiming it on your schedule E as a rental property. You can still claim it on Schedule E for the part of the year that you did not occupy the property.

You do not need to refinance.

 

[fstime]

Obviously ask your accountant, however, I believe you would simply stop claiming it as an investment and start as a primary residence, which would probably be worse for tax purposes since you can now only deduct property taxes and mortgage interest instead of all costs.

If you are truly living there, you should have changed all utility bills over to your name and change all mailing addresses to the new residence for anything of importance (your employer, town hall records, bills, drivers license, pistol permit, etc).

There is no way a refinance is part of the process unless you wish to do so for other purposes.

 

[OCGuy]

"Claiming" it as your primary residence is actually more conservative than a rental.

When it was a rental, not only should you have been writing off your mortgage interest, property tax, and insurance.....but any repairs or other expenditures also would go on your Schedule E, along with depreciation.

 

[fstime]

The reason I stated to change important mailing addresses is if you decide to sell, I believe you can profit up to $250,000 tax free if you have been living there for over 2 years which is huge.

 

[Lithium381]

so even though when i bought it, i put the checkbox on "investment" it's not going to change the fact that it's now my primary home. when i bought it i seem to remember wording stating "i'm not planning on living here. . . blah blah". . .can i simply change my mind and move in?

 

[fstime]

so even though when i bought it, i put the checkbox on "investment" it's not going to change the fact that it's now my primary home. when i bought it i seem to remember wording stating "i'm not planning on living here. . . blah blah". . .can i simply change my mind and move in?

That is simply for lending purposes, mortgages on investment properties usually carry either a higher interest rate and/or higher closing costs and a different underwriting standard I assume since they factor in investment income.

 

[allisolm]

Don't forget to file come January for homestead exemption. Form.

 

[Lithium381]

That is simply for lending purposes, mortgages on investment properties usually carry either a higher interest rate and/or higher closing costs and a different underwriting standard I assume since they factor in investment income.

So then in theory the lenders would be MORE pleased if i moved in since i'd be considered more stable and more likely to pay off the mortgage?

I did get a higher than baseline interest rate. . by about .5% for taking it as an investment property.

I just purchased in Feb and my wife had moved in by March. . due to job obligations i didn't move in myself immediately. SO there was never a renter in the house. The lender wouln't write it as a second home because i coulnd't PROVE i was going to be there 3+ months in the year because i wasn't moving right then. . . . now i have arranged that i WILL be there more than 3 months / year. .

 

[Lithium381]

Don't forget to file come January for homestead exemption. Form.

good call, thanks!

 

[fralexandr]

You also might want to check your home insurance, since home insurance for a rental property is typically more expensive than for a primary residence. Not sure if this applies to you though.

 

[Fern]

I purchased a property originally as an investment property. We've now moved into it. What do i need to do in order to claim it as a primary? Do i need to refinance? Can i simply start claming it on taxes?

State in question is TX

For income tax purposes all you need to do is start claiming it on your tax return.

Fern