Info request from Puna Residents

[terracore]

Originally Posted by oregonwoodsmoke

I'm not a tax lawyer, but my understanding of it is that you can deduct expenses to "look at real estate" only if you actually buy real estate that is purchased as an investment. You can not deduct any expenses for any family that accompanies you, or any recreational type expenses, and you can't deduct for looking for a personal residence.

But hey, every little bit helps. Consult your accountant and don't take my word for anything that has anything at all to do with taxes. I don't know much and what I do know might be out of date.

Not sure if it makes a difference, but we bought the land with the intent to use it as our primary residence (for the tax deduction) and didn't bring family (just my spouse, who co-owns the property). Not as an investment. Whatever the case the CPA handled everything so I'm sure the deductions were legitimate. I wouldn't recommend anybody try a tax deduction like this without consulting a professional.

[OpenD]

Originally Posted by terracore

Whatever the case the CPA handled everything so I'm sure the deductions were legitimate.

Yikes, I think that's a scary assumption!

I can't tell you how many people I know who have come to grief from following professional advice that turned out to be wrong. Besides the friends who've gotten killed in later audits, a guy I once worked for wound up in a multi-million dollar lawsuit with the IRS over advice that his CPA gave him, and he lost. Big time!

As I understand the rules, based on deductions I've taken in the past, some moving expenses are deductible if they are due to a change in employment, within specific time & distance and employment parameters. Here are a few of the key points, from the IRS website:

"If you moved due to a change in your job or business location, or because you started a new job or business, you may be able to deduct your reasonable* moving expenses but not any expenses for meals. To qualify for the moving expense deduction, you must satisfy two tests. Under the first test, the "distance test", your new workplace must be at least 50 miles farther from your old home than your old job location was from your old home. If you had no previous workplace, your new job location must be at least 50 miles from your old home.

The second test is the "time test". If you are an employee, you must work full-time for at least 39 weeks during the first 12 months immediately following your arrival in the general area of your new job location. If you are self-employed, you must work full time for at least 39 weeks during the first 12 months and for a total of at least 78 weeks during the first 24 months immediately following your arrival in the general area of your new work location."

Tax Topics - Topic 455 Moving Expenses

Not trying to freak you out, and I sincerely hope you did get the right advice, but I am trying to caution others that you can't just assume you will be able to deduct your moving expenses. You need to get detailed advice from a knowledgeable professional, someone who will be accountable for the accuracy of that advice. And it never hurts to do a little research of your own to confirm the validity of what you're being told. Because it's your okole in a sling if they're wrong.


*"reasonable," for example, is limited to one day's stay in a hotel after you arrive.

[oregonwoodsmoke]

The big problem with tax advice is that the tax laws are really vague and the IRS seems to interpret them however it benefits them on the day. So your expert might be doing his best and still get whalloped.

It's not like a private party could afford to sue the IRS. They've really got you and the safest thing is to not make them angry or draw their attention.

I can tell you one thing for sure. Don't take an IRS agent's advice on tax law, especially not the ones manning the phones for call-in questions. Many of them don't understand it.

[OpenD]

Originally Posted by oregonwoodsmoke

I can tell you one thing for sure. Don't take an IRS agent's advice on tax law, especially not the ones manning the phones for call-in questions. Many of them don't understand it.

Worse, the courts have ruled numerous times that even if the IRS gives you advice in writing that is not legally binding.