Purchased first home, house hacked and needing tax advice

[Jazmin Winsor]

Hi bigger pockets community! My partner and I just purchased a house in Feb and are renting out the majority of the home. We were fortunate to get the ball rolling fairly quickly and only have to fork out 1.5 months of mortgage on our own. 
my partner thinks he can do all the taxes for the home and depreciation on turbo tax, as that’s what he’s been doing forever since he’s a w2 earner. I on the other hand am begging for him to try a cpa since there’s alot of new concepts with maintence vs improvements etc for tax purposes. I’m trying to have him see the bigger picture if he puts money in tax advantage accounts first and strategically uses a tax professional, that he will be able to offset his high tax bracket w2. For reference we are not married and file separately. I do work remotely from the home and was also wondering if I could write off the portion of where I use the space as a office on the same home as he’s claiming without causing any flags on the property address. Like I said this is our first property and it’s a special case since I use the portion of the house (in the bedroom) as my office and we rent out technically 3 bedrooms 2 baths to renters. In the listing, the house is a 3 bd / 2 ba so would we count the area we live in as another bedroom/ living space or would I’d using the bedroom rule for taxes, just say we rent out all the rooms, writing off 100% ? That seems weird to me and would raise red flags for auditors and I want to persue this in the best knowledgeable way possible.  Any references to a cpa or any other type of tax professional in the Solano county area would be greatly appreciated! 

[Sean O'Keefe]

Quote from @Michael Plaks:

Quote from @Jazmin Winsor:

Hi bigger pockets community! My partner and I just purchased a house in Feb and are renting out the majority of the home. We were fortunate to get the ball rolling fairly quickly and only have to fork out 1.5 months of mortgage on our own. 
my partner thinks he can do all the taxes for the home and depreciation on turbo tax, as that’s what he’s been doing forever since he’s a w2 earner. I on the other hand am begging for him to try a cpa since there’s alot of new concepts with maintence vs improvements etc for tax purposes. I’m trying to have him see the bigger picture if he puts money in tax advantage accounts first and strategically uses a tax professional, that he will be able to offset his high tax bracket w2. For reference we are not married and file separately. I do work remotely from the home and was also wondering if I could write off the portion of where I use the space as a office on the same home as he’s claiming without causing any flags on the property address. Like I said this is our first property and it’s a special case since I use the portion of the house (in the bedroom) as my office and we rent out technically 3 bedrooms 2 baths to renters. In the listing, the house is a 3 bd / 2 ba so would we count the area we live in as another bedroom/ living space or would I’d using the bedroom rule for taxes, just say we rent out all the rooms, writing off 100% ? That seems weird to me and would raise red flags for auditors and I want to persue this in the best knowledgeable way possible.  Any references to a cpa or any other type of tax professional in the Solano county area would be greatly appreciated! 

What you guys probably do not realize is that you cannot generate ANY tax loss when you rent out part of your house. TurboTax or CPA - same issue. Your partner may be able to trick TurboTax into "allowing" a loss by manipulating some checkboxes, but it will be against the tax rules.

You have a tough dilemma. Doing things correctly on your own is difficult in your situation. However, hiring a CPA will not save you any money, in other words will not reduce your taxes.

Great response here from @Michael Plaks (to what was a very long post, this is critical info).

Here's are some other common terms for House Hacking -> Room Sharing, Owner-Occupied Rental. The reality is that the tax impact and ability to take ANY losses (as Michael mentioned) is based on a number of factors that include whether or not it is a "separate dwelling unit". Based on your post this doesn't sound like the case.

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*This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.