House Hacking - question about taxes

[Paul Hogan]

Hi all,

I’m looking at purchasing a 2-family house—living in the primary unit and renting out the other unit. The percentage split is roughly 67/33% with the owner’s unit being the larger of the two. The rent will only cover a portion of the full mortgage for the house. I’m trying to figure out what percentage (hopefully 100%!) of the rental income I can deduct for tax purposes. To put some specific numbers against it:

Total monthly mortgage payment: $5,000

Rental income: $1,750

Total monthly taxes: $500

I also need to put $10,000 of work (new appliances, etc) into the rental prior to renting it out. Can I deduct all $10,000 against the rental income for tax purposes? Can this be rolled over for multiple years if the cost of rehab is in excess of the rent?

I’m sure there has been a prior post on this subject, but I’m having trouble finding a clear answer. Appreciate any help!