Keep Investment Property, Surrender Primary Residence

[justbroke]

Here's an interesting question. I have a primary residence valued at about $600K and an investment Property valued at $205K. I want to keep the investment property and surrender the primary residence.

I'm also doing this pro se, so, this makes it more fun.

Do I have to treat the investment property as a "mortgage" / residence (e.g. must used the "Local Standards: housing and utilities; mortgage/rent expense.", or treat it like any other installment loan?

What I'm really asking is, can I, myself, be a renter and keep the investment property while stay claiming the "Local Standards: housing and utilities; mortgage/rent expense." on Form B22 C?

[HHM]

1. You actually have to live in the residence to claim as your primary.

2. Do you have a mortgage on the rental (I presume so, but I want to make sure)?

[justbroke]

1. You actually have to live in the residence to claim as your primary.

2. Do you have a mortgage on the rental (I presume so, but I want to make sure)?

1. I'm not claiming it as my primary. Would still claim as a "rental" (income generating) property. My primary residence would be surrendered.

2. I do have a mortgage on the rental.

[fltoo]

Is it possible for you to start living in the rental or is there a reason why you don't want to?

Reason I am asking, this is a perfect opportunity to live in the rental for two years and if you sell within 5 years, no capital gains tax on the profit.

[HHM]

Well, keep in mind, when it comes to Schedule J (expenses), you can only claim your "actual" living expenses.

I do not think you can claim the housing expense, either for means test or schedule J for a home in which you do not actually reside.

[justbroke]

Is it possible for you to start living in the rental or is there a reason why you don't want to?

Reason I am asking, this is a perfect opportunity to live in the rental for two years and if you sell within 5 years, no capital gains tax on the profit.

It's in a different State. Could mean change of job and even less income to pay to creditors. Although that wouldn't be such a bad thing, I'm not changing jobs unless I must.

[justbroke]

Well, keep in mind, when it comes to Schedule J (expenses), you can only claim your "actual" living expenses.

I do not think you can claim the housing expense, either for means test or schedule J for a home in which you do not actually reside.

I don't understand. I do have a housing expense because I "rent" a house from someone else in my work State. My investment property is in another State. I should be able to keep that (just like any other asset in a Chapter 13). I should still be able to claim the housing expense because I don't live in that house.

I know... great question for a lawyer...

[HHM]

I guess I am not following what you are asking then?

When it comes to expenses, an investment property is a business expense, not a housing expense, becuase you don't live in the house. As with any expense in BK, you list it, of course. At the same time, you also claim the rental income as part of your income.

[justbroke]

I guess I am not following what you are asking then?

When it comes to expenses, an investment property is a business expense, not a housing expense, becuase you don't live in the house. As with any expense in BK, you list it, of course. At the same time, you also claim the rental income as part of your income.

That's what I thought.

I am keeping the investment property as a "business expense" and the rental income is "income". However, on one of the websites which completes your forms for you, it asks for "mortgages" and when I put it into "mortgages" it took away my Housing Expense allowance (for the house that I rent as my residence). So, I moved it to "installment" loan instead.