House Hack Tax Questions

[Gail W.]

Hello all! We have a unique opportunity to purchase 2 homes on 1 lot. It's a large parcel that used to be 2 separate APN lots, but was made into one. There is a primary house on one side, and a smaller house at the other end. 

We would like to buy it, live in the larger house (which isn't in that great condition) and rent the smaller house (that's actually nicer!) to our adult, married daughter. She and her husband would rent it at fair market value.

We have found out we CAN split the lot back to 2, but would have to get the electric meter split as well. The realtor says it would be around $40k.  She states it would be good to do if we decide to sell off the one portion with the smaller house. BUT, if we want to make this the forever-family-compound, should we bother?

Also, how will that impact taxes? I'm thinking as it is now, it's a 50/50 situation related to write offs, costs, fees, mortgage interest, etc...  If we split, how does that help/hinder our situation?

And since the house we'd live in is the one that needs more work, the write offs aren't going to be that great, correct?

TIA!!  (I HAD a CPA, but am looking for another so I can't ask him/her yet;)