Looking to buy a multi family (3 unit) owner occupant this year. Goal is to live in one, long term rent one unit and short term rental the bottom unit. Im reading the book on tax strategies volume 2, and I’m learning more about depreciation. I am curious what others have to say or what they learned from a similar experience. My fiancée and I will be married next year (after 4/15), we will be over the $150k Adj Gross income threshold together but if we continued doing separate taxes we would fall below individually. I wasn’t sure how or if that could work as we would own the property together. Would love to get everyone’s thoughts and input on the matter. Thanks in advance!
Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
3y
Preston- really depends on the situation but generally MFJ will be more advantageous. That being said, whoever you go with for your tax return can easily separate out you and your wife and tell you what’s best in your situation. For house hacking, a portion of the expenses will be allocated to you personally (either non deductible or on schedule A), and then rental (put onto schedule e). The depreciation will be allocated in the same manner. There are tons of articles online (some written by members of this community) that explain in more detail.
Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
3y
Preston- really depends on the situation but generally MFJ will be more advantageous. That being said, whoever you go with for your tax return can easily separate out you and your wife and tell you what’s best in your situation. For house hacking, a portion of the expenses will be allocated to you personally (either non deductible or on schedule A), and then rental (put onto schedule e). The depreciation will be allocated in the same manner. There are tons of articles online (some written by members of this community) that explain in more detail.
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
3y
The passive activity loss rule limitations can be complex. Filing a MFS may potentially not fix your issue if you both live in teh same household and /or each have income above $75,000.