Tax Red flags on fully-owner occupied SFH + part owner occupied/rental SFH within 20m

[Josh Smith]

Hi,

I have a SFH1 (4bed/2bath) in which I live with my partner and kid and occupy fully. I also have another SFH2 (4bed/2bath) 20 miles away. In SFH2, I rent a couple of rooms out and keep the rest for my personal use. Personal use includes: storing of some family personal papers/records which I don’t want to keep at SFH1, sometimes I have a guest over who I don’t want to live with us, sometimes I need to sleep at SFH2 when I am working late at my job/taking a mental time out with my partner. Another reason is that renting only a couple rooms allows me access to SFH2 anytime I want vs renting it out fully means I don’t have as much access to the house, and I like the increased accessibility.

To put in perspective, both SFH1/SFH2 are ~1million houses in California.

1) Does this arrangement look odd from a tax perspective? Maybe the tax man will ask why do you need to part occupy another SFH2 house when you have spare bedrooms in your SFH1?

2) If its arrangement is ok, what would this SFH2 part-rental be called for tax purposes…would it be called a “second home”? I know it won’t be called a “vacation home”, as a “vacation home” needs to be at least 50 miles from your primary home.

3) Any tax (or otherwise) advantages/disadvantages of this SFH2 part-rental vs converting SFH2 into full rental (not occupying any of SFH2)?

Thanks!