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#1
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Illegally renting main house and living in another house built on back of the house on same plot...
I am buying a property in CA. This has total 7500 sq.ft. plot. About
4500 sq.ft. plot is availabe behind main house. I want to construct another house on the plot, behind main house. Legally I will treat it as in-laws apartments (I will take legal permit for the construction). Once it is build I will move it the new house and rent the main house. Rent received is illegal and not disclosed IRS. So I am not paying any tax on rental income. 1. Do you think that this plan has hay loop holes, problems? 2. Has anyone done this? Do many people do this? 3. Any tips on negotiating mortgage for buying and construction? 4. What would you do if you have 4500 sq.ft of plot available behind your main house? -Kaushik |
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#2
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When you say rent received is illegal - do you mean it's not legal to rent
this property for some reason, or that you are planning to hide your rental income to avoid paying taxes? If the latter, you should be aware that rental properties can be a trememdous tax shelter. There's probably not much incentive to hide the income. You can write off all sorts of things related to the upkeep of the property and depreciation. "Kaushik" wrote in message om... I am buying a property in CA. This has total 7500 sq.ft. plot. About 4500 sq.ft. plot is availabe behind main house. I want to construct another house on the plot, behind main house. Legally I will treat it as in-laws apartments (I will take legal permit for the construction). Once it is build I will move it the new house and rent the main house. Rent received is illegal and not disclosed IRS. So I am not paying any tax on rental income. 1. Do you think that this plan has hay loop holes, problems? 2. Has anyone done this? Do many people do this? 3. Any tips on negotiating mortgage for buying and construction? 4. What would you do if you have 4500 sq.ft of plot available behind your main house? -Kaushik |
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#3
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In article , Kaushik
wrote: I am buying a property in CA. This has total 7500 sq.ft. plot. About 4500 sq.ft. plot is availabe behind main house. I want to construct another house on the plot, behind main house. Legally I will treat it as in-laws apartments (I will take legal permit for the construction). Once it is build I will move it the new house and rent the main house. Rent received is illegal and not disclosed IRS. So I am not paying any tax on rental income. 1. Do you think that this plan has hay loop holes, problems? Yes...the part about not telling the IRS. That can put you in the big house under the worst case scenario. Never screw with them guys. Even if this is not a legal rental, the probability of the local government ever doing anything about it is small. Second, why not make it a legal rental? In most places, all you have to do is get it inspected and have a rental license issued. Also, check the zoning. But if this is zoned for single family houses, a single family rental should not be a problem. -john- -- ================================================== ================== John A. Weeks III 952-432-2708 Newave Communications http://www.johnweeks.com ================================================== ================== |
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#4
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Kaushik wrote:
1. Do you think that this plan has hay loop holes, problems? Let's see, oh yeah, the whole ILLEGAL part. 2. Has anyone done this? Do many people do this? I'm sure people have done this. Some probably get away with it, some not. 3. Any tips on negotiating mortgage for buying and construction? Make sure the lenders know all about the illegal part otherwise you can get in trouble. 4. What would you do if you have 4500 sq.ft of plot available behind your main house? 4500 square feet is pretty small. I'd put a garden in it. -- -Bill |
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#5
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Bill Seurer wrote:
Kaushik wrote: 1. Do you think that this plan has hay loop holes, problems? Let's see, oh yeah, the whole ILLEGAL part. + neighbors. And is there a homeowners association? 4. What would you do if you have 4500 sq.ft of plot available behind your main house? 4500 square feet is pretty small. I'd put a garden in it. we have about twice that, probably more. Plant some fruit trees, vegetables and some lawn. I couldn't possibly stand the noise of having people that close by in more directions than we have already. 4500sf is 67 ft square. if you put a 1000 sf house on that you have 18 feet clearance - assuming the house is square. Maren |
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#6
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Won't your local town/city have an objection to allowing you to have two
houses on a single family lot? "Kaushik" wrote in message om... I am buying a property in CA. This has total 7500 sq.ft. plot. About 4500 sq.ft. plot is availabe behind main house. I want to construct another house on the plot, behind main house. Legally I will treat it as in-laws apartments (I will take legal permit for the construction). Once it is build I will move it the new house and rent the main house. Rent received is illegal and not disclosed IRS. So I am not paying any tax on rental income. 1. Do you think that this plan has hay loop holes, problems? 2. Has anyone done this? Do many people do this? 3. Any tips on negotiating mortgage for buying and construction? 4. What would you do if you have 4500 sq.ft of plot available behind your main house? -Kaushik |
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#7
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#8
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"John W." wrote in message om... I'm just a lurker, but do you think it wise to admit in a public forum that you know it's illegal? Wouldn't take an IRS agent ten minutes to find this thread.... True. But that assumes that the IRS actually has the resources to enforce petty income tax evasion by tracking down suspicious postings on the internet with no other evidence of wrongdoing; that it's even possible to identify the individual who posted that (is it a real email address? did it exist before last week?); and finally it seems likely that the actual offense would not be committed for years. |
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#9
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Besides, they are going to have a lot of explaining to do about why they
are surfing the internet while on the job  Jamie wrote: True. But that assumes that the IRS actually has the resources to enforce petty income tax evasion by tracking down suspicious postings on the internet with no other evidence of wrongdoing; that it's even possible to identify the individual who posted that (is it a real email address? did it exist before last week?); and finally it seems likely that the actual offense would not be committed for years. |
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#10
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it may be part of their job assignment to find thing like this?
Ravi Desai wrote: Besides, they are going to have a lot of explaining to do about why they are surfing the internet while on the job Jamie wrote: True. But that assumes that the IRS actually has the resources to enforce petty income tax evasion by tracking down suspicious postings on the internet with no other evidence of wrongdoing; that it's even possible to identify the individual who posted that (is it a real email address? did it exist before last week?); and finally it seems likely that the actual offense would not be committed for years. |
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#11
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Kaushik wrote:
I am buying a property in CA. This has total 7500 sq.ft. plot. About 4500 sq.ft. plot is availabe behind main house. I want to construct another house on the plot, behind main house. Legally I will treat it as in-laws apartments (I will take legal permit for the construction). Once it is build I will move it the new house and rent the main house. Rent received is illegal and not disclosed IRS. So I am not paying any tax on rental income. 1. Do you think that this plan has hay loop holes, problems? Well, yeah. Not reporting income to the IRS is rarely a good idea. Weigh the chances of getting caught against the depth of the GOP you could land yourself in. Probably not a good trade-off. Breaking zoning laws is also a bad idea. All it takes is one ****ed off neighbor to land you in trouble ranging from fighting for a retro-active variance (not easy, in most of (coastal) CA), to a huge fine, to tearing it down AND paying a huge fine. 2. Has anyone done this? Do many people do this? California's low-rent neighborhoods are full of this sort of illegal housing. 4. What would you do if you have 4500 sq.ft of plot available behind your main house? I've got a deck, hot tub, greenhouse, vegetable garden, trampoline, some lawn, and fruit trees. (And neighbors on three sides. Yuck.) -- programmer, author http://www.midnightbeach.com and father http://www.midnightbeach.com/hs |
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#12
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I seriously hope that MY taxes are not paying someone a salary for this...
considering how people get away with much larger, obvious income tax evasions that don't require extensive Internet forensics to uncover the identity of a person who is considering the possibility of committing a crime at some point in the future. I suspect the IRS would get a lot better mileage simply by auditing a larger number of tax returns each year. "Maren Purves" wrote in message ... it may be part of their job assignment to find thing like this? Ravi Desai wrote: Besides, they are going to have a lot of explaining to do about why they are surfing the internet while on the job Jamie wrote: True. But that assumes that the IRS actually has the resources to enforce petty income tax evasion by tracking down suspicious postings on the internet with no other evidence of wrongdoing; that it's even possible to identify the individual who posted that (is it a real email address? did it exist before last week?); and finally it seems likely that the actual offense would not be committed for years. |
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#14
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"Ravi Desai" ??? ???... Besides, they are going to have a lot of explaining to do about why they are surfing the internet while on the job Jamie wrote: True. But that assumes that the IRS actually has the resources to enforce petty income tax evasion by tracking down suspicious postings on the internet with no other evidence of wrongdoing; that it's even possible to identify the individual who posted that (is it a real email address? did it exist before last week?); and finally it seems likely that the actual offense would not be committed for years. |
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