Rental Income Taxes (Renting rooms)

[Jared H.]

My wife and I recently purchased our first home in Oahu for $535k a few months ago @ 4% with the VA loan 30yr fixed. (3bd, 2.5ba) Our mortgage is about $2,700/mo with $375/mo HOA.

We decided to rent two rooms out at $1,000/mo each and split electricity (HOA covers other utilities). 6mo-1yr year leases to abide by HOA restrictions.

As far as taxes go for the upcoming season I'd imagine we have to report this as income tax even though we live in the house as well and deduct interest. Are we able to deduct HOA fees as well or can we not since it is still our primary residence?

When we leave Hawaii to PCS I'm still undecided on whether or not I want to hire a property management company. The only way to cover the full mortgage & HOA is to rent all the rooms individually which I'm not sure if property managers will do that. It would currently only rent out for $2,300/mo for a single family. What would be your move?

We plan to hold the property for long-term due to appreciation rates/value (+up to $900-$1,000/mo goes to Principal anyway) & purchase a positive cash flow property in a cheaper market after we move on a conventional. Eventually rent should raise high enough to rent out and break even & demand is high for room rentals, it's easy to find good tenants in this market (less than 3 days).

Any information on the tax info & suggestions/opinions on our next move is highly appreciated & valued.

Thank you in advance!