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Will my daughter's home be at risk due to joint rental property ownership?

Will my daughter's home be at risk due to joint rental property ownership?

Q: What are the disadvantages of claiming a parent as dependent?

Claiming a parent as a dependent can limit your ability to claim certain tax credits or deductions. Additionally, if your parent has significant income or assets, it may disqualify you from claiming them as a dependent. Furthermore, if you are not careful with the IRS requirements, you could face penalties or audits.

Q: How much can a dependent make and still be claimed?

For tax year 2023, a dependent can earn up to $4,400 in gross income without affecting your ability to claim them. If their income exceeds this amount, they may need to file their own tax return, which could impact your eligibility to claim them as a dependent. Always check the IRS guidelines for the most current limits.

Full question:

Our daughter,and ex-son-in-law have 5 rental units in both their names, LLC, including a loan of $8,000, he is not trustworthy. My question-if she were to buy a home, and something would come up regarding the apartments and loan, would her home be in any jeopardy with the joint ownership of the rental units and loan? We want her to buy a home, put it our name, she wants it in her name for the tax benefit, if he should get an idea of how he could have this taken away from her. We plan to give her money to help with the down payment and I just can't trust him.

Category: Real Property
Date: 04/07/2025
State: Ohio

Answer:

The answer depends on how the mortgage for the rental units is structured. If your daughter and her ex-husband are jointly liable for the debt, the lender can pursue either or both for payment in case of default. Typically, a mortgage secures a loan with the property as collateral. If the mortgage defaults, the lender can foreclose on the property to recover the debt. If the sale proceeds don't cover the debt, the lender may seek a deficiency judgment against the borrowers, which can impact their credit ratings and future borrowing ability.

If there’s a divorce agreement, it might specify who is responsible for the debts related to the jointly owned property. If one party fails to meet their obligations as per the divorce court's orders, the other can take legal action for contempt.

If the rental properties are owned by an LLC, creditors must pursue the LLC for debts, not the individual members, unless there are personal guarantees. If your daughter signed a personal guarantee, she could be liable for the LLC's debts. It's crucial to review any guarantees to understand liability in case of default.

Generally, an ex-husband does not have a claim on property purchased by a divorced spouse after the divorce. However, your daughter should be cautious about any unresolved obligations from before the divorce.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

Can I claim my parent as a dependent if she receives social security?

You may be able to claim your parent as a dependent if she meets certain criteria, even if she receives Social Security. To qualify, she must live with you for more than half the year, have a gross income below the IRS threshold, and you must provide more than half of her financial support. Check IRS guidelines for specific income limits and requirements to ensure eligibility.

How much do you get for claiming a parent as a dependent?

When you claim a parent as a dependent, you may qualify for a dependent exemption, which can reduce your taxable income. For tax year 2023, the exemption amount is $0 due to changes in tax law, but you may still benefit from credits like the Credit for Other Dependents, which can provide up to $500. Always check the latest IRS guidelines for updates.

What are the disadvantages of claiming a parent as dependent?

Can you get in trouble for claiming someone else's child on your taxes?

Yes, claiming someone else's child as a dependent on your taxes can lead to legal trouble, including penalties and audits. The IRS requires that you have the right to claim a dependent, which typically means the child must live with you and you must provide significant financial support. Always ensure you meet the IRS criteria before claiming a dependent.

How much can a dependent make and still be claimed?

How do I report rental income for a single member LLC?

To report rental income for a single-member LLC, you will typically use Schedule E (Supplemental Income and Loss) on your personal tax return (Form 1040). The income and expenses related to the rental property should be detailed on this form. Ensure you keep accurate records of all income and expenses to support your tax filings.