The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: TravelJunkyQC on February 14, 2017, 10:04:14 AM
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Hey there - I'm going to consult a tax specialist, but I also wanted the opinion of the MMM community before doing so.
Situation:
My partner and I have been looking for properties outside the city for almost two years now. No rush, but always ready when the right opportunity came along. The right opportunity seems to have come along now: there are 3 available parcels of land all next to each other. Each parcel has a few acres of buildable land, with a 10-acre unbuildable piece attached to it. This is exactly what we've always wanted. To be in the woods.
We would like to buy two of the smaller parcels, one for us to build a house on, and the other to build a house on for my parents to live in part time (they live in the US the rest of the time).
Question:
What are the tax implications of owning two properties, both in our names, but only one of which we live in? Would it be considered a rental property since someone else would be living in it? Or perhaps just as if it was a second property of ours? I would not ask my parents to pay rent when they stay there, although I may rent out Airbnb-style a few times a year when they aren't there. My partner is convinced that we should put the second property in my parents' name even if we pay for it, but I think it would be more trouble to do so (considering my parents aren't currently residents of this country anyway). I think that the only implication is that we will be taxed on capital gains for the second property, but that's it. Am I wrong?