City of Tacoma WA recently sent out notices to land lords threatening to slap them with back taxes if they do not pay the annual fee and taxes on their rental income.
So basically, the feds tax you and in most states the state does too, then the city wants a piece as well.
It's common in many cities. Is the amount in question a substantial percentage of your earnings from said property?
Makes me want to sell and buy a house elsewhere with the proceeds.
It's always a valid option. God Bless America!
Not currently, though the license fee is more expensive if I make just a few hundred dollars more. I think there may be a different tax rate too, have to check. Currently it's just $25 owed per year for the license and then I think a 4% tax on the GROSS rent. It is about $500 a year in tax and license fees., so it eats $50 a month into my profits. Trouble is, I can't pass that on, otherwise the rent will be too high.
I could just sell (it's within the 2 years ownership, 3 years rental period) either outright or with a 10-31 exchange to avoid depreciation recapture (maybe 5K at best) and buy a house across the Narrows bridge paid in cash with half the proceeds, then probably buy another paid in cash with the proceeds in the same area. Commute is fine for me, not so great for my gf, but her job pays retail wages for a commute to the big city...not worth it.
Nice thing is, that would actually add to my FI situation, and I could let the other house that I have under contract in an HOA go and still have about 150K in cash, live in a paid off house again (which increases my savings rate), and have a paid off rental along with two mortgaged rentals.
I already own one house in an HOA, and would rather not own another one, though I didn't come to that decision until long after I signed the paper work for the short sale purchase; they seem to be useless and don't actually enforce anything in the by-laws other than MAYBE what color you paint your house.