Tax and legal implications of 5+ units

[Stephanie W.]

I have a six unit under contract. It is my first 5+ property. I have two duplexes and four single families and manage them all myself.

Are there different landlord/tenant laws that only kick in once 'commercial property' status kicks in? 

Are there any differences in the tax code for a 6 unit as opposed to a duplex?

Lastly, do any special legal issues arise once this threshold of units is reached?

Thanks in advance for the input.

[Jon Holdman]

@Andrew Kniffin   I made that mistake early on, too.  You need a commercial loan for a 5+ unit apartment building but its still residential for depreciation.

I think you're thinking of this exemption (from Fair Housing FAQ):

The Fair Housing Act covers most housing. In some circumstances, the Act exempts owner-occupied buildings with no more than four units, single-family housing sold or rented without the use of a broker, and housing operated by organizations and private clubs that limit occupancy to members.

I would recommend having a discussion with both your accountant and your landlord/tenant attorney and having them brief you on the issues for this larger building.  But for the most part the residential vs. commercial distinction is related to lending.  That's a consequence of Fannie Mae/Freddie Mac guidelines that only allow them to buy 1-4 unit properties.

Building codes are often stricter for larger buildings.  But those may kick in at three units, not five.  For example, the International Residential Code applies only to SFRs and duplexes.  Larger building are covered by the International Building Code.