Duplex house hacking tax strategies

[Brandon Pelfrey]

I've got a duplex under contract that will close on the 31st that I'm planning on house hacking - what should I do to prepare from a tax perspective?

Any experience or guidance out there on what I can do to maximize the tax benefits and minimize my tax liability would be greatly appreciated!

Also, in case this has any bearing on what I should do: the orher side of the duplex is currently in a lease with under market rents until September. After the lease is up I plan on trying it out on Airbnb.

[Natalie Kolodij]

So you will need to split everything between your primary unit and the rental unit. 

Assuming they are the same size 50% primary will go on your schedule A

50% of costs onto schedule E as a rental

On your primary only interest and taxes are deductible

where as on the rental half you can also deduct all operating expenses: Insurance, repairs, advertising, depreciation, maint, ect

For depreciation purposes you'll need to figure out the building vs. land value- then split that as you only get to depreciate the %related to the rental side- not your personal. 

You also may need an adjustment next year and ST rentals vs LT have different depreciable lives