Tax Situation With Rental Property - "Primary Residence"

[Slaiman Atayee]

Had a question about what the IRS requirements are to establish a permanent residence. I have lived in my parents house for the 2 years I've been out of school and I am not paying rent nor am I on my parent's mortgage (got to love parents). I bought an investment property in DC last year in July (07/2017) and spent the last half of the year rehabbing the place to get it rent ready, which it finally was as of January 2018, when I began listing it for rent. According to a CPA I talked to, after I bought my place, the DC residence could be considered a permanent residence given that I do not pay rent nor am I on the mortgage of my parents house. I wanted to know what I would have to do to establish my parents home as my primary residence, and refer to my DC property as an investment. Thanks!

[Dave Foster]

@Slaiman Atayee, I would question any cpa who told me that a rental investment property that I did not reside in could be counted as my primary residence.  You do not reside there and it is not your primary residence.  And if he/she files your taxes appropriately and declares your rental income and depreciates the property you will be committing fraud.

Your primary residence is where you live.  You do not have to own it.  You have to live there.  You live with your parents (a very cool thing from this dad's perspective) and the DC property is your investment.

You can establish that DC residence as your primary residence by moving in.  Easy as that.