fha loan, primary residence 3 years, convert to rental

[Cindy Konopasek]

This is my first post to this site. My husband and I, along with our daughter, purchased a townhouse. My daughter qualified for an FHA loan as a first time home owner along with the stimulus plan.

She has lived in the townhouse for over 3 years. She would like to rent out 2 of the bedrooms , like a "little" landlord. Since we own this property together, would we need to form a LLC, partnership, with a predetermined percentage of ownership, say 35, 35 , 30%.

At this point she would be able to deduct at least 30% of whatever percentage of the house is being rented out. (depreciation, expenses, etc.)

My husband and I would be able to use the other 70% for property tax and mortgage interest on our taxes. We make over 150,000 so other deductions (depreciation, expenses) would not benefit us at this time.

Our goal is to get our real estate license and become more knowledgeable in the real estate business so that we would be able to benefit from all of the rental deductions, as we acrue more rentals.

The only thing is that we are not sure if we can make the townhouse a rental property if my daughter discontinues to live there because of the FHA loan. Currently it is her primary residence.

I would appreciate any replies or suggestions regarding these topics.

Thank you,

Cindy

[Matt Devincenzo]

As far as the LLC and taxes I'm not sure, I've partnered with my parents but the properties were always entirely investment and none of us benefited(lived there ect).

As far as your daughter moving out, it is not a problem the stipulation on OO is that you move in within 60 days and continue living there at least one year. Since you say you bought 3 years ago then obviously you have passed that test.