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Updated almost 8 years ago,

Account Closed
  • Investor
  • Ridgefield, NJ
0
Votes |
19
Posts

House hacking - Sch E

Account Closed
  • Investor
  • Ridgefield, NJ
Posted

I am currently house hacking and want to know what the best way is to maximize return on Schedule E. 

1. Dividing expenses - I see some post saying that I should just divide the unit by half. In my case, my tenants space is much smaller. I currently occupy 59% of house and 41% occupied by tenant (based on living square footage shown on appraisal )

Would you agree that I pro-rate my portion and tenant portion(sch E ) by 59/41? So apply 59% of Mortgage interest/Real estate taxes on Sch A and 41% of other expenses on Schedule E (like utilities, depreciation, repairs?)

2. Depreciation (land vs improvement). I have land value/improvement showing up on both my appraisal and tax bill. appraisal shows more improvement value so I am thinking of going by appraisal number ( obviously ) but wanted to see if this method wont have any negative consequences.

3. Depreciation (Calculation) - Is it as simple as adding purchase price + prepaid closing cost (half of attorney fee and full HOI premium paid with credit prior to closing. No closing cost paid at closing due to sellers concession) - minus total land value on appraisal. Then dividing the result by 27.5? Is this the number that I have to use every year?

4. If anyone knows, how do I prorate above depreciation on turbotax? 

5. Future UW income - Will lender typically add back depreciation, interest, hoi,mortgage insurance premium back when they calculate my DTI? I am curious if I can write off less but stay in minus range so that I will have more income (if they add back those above items )to increase income used toward DTI. What do you think?

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