New to owning (1yr) and want to start renting....

New to owning (1yr) and want to start renting....

Homeowner · Seattle, WA · Member since 2022 · 2 posts · 1 vote

We bought and moved into our first home December of last year. I know. We've lived there and are looking to start renting either part or all of our home as we move further into investing. I've been trying to learn what I can about the taxes portion of renting out but most of what I can find is specific to BNB or other programmed STR and complete property STR/LTR.

Is there a resource I should be reading or watching/listening to that can inform me more about what I need to know? I am specifically trying reduce tax burden in a legal way and open us up to more possibilities in investing. Right now I can rent the entire home for approximately the cost of mortgage plus 5% each for maintenance and vacancy if I self manage. It will flow a whopping 100 or so monthly. Nothing to get excited about at all. Hahaha. 

So here I am asking the smarter and more experienced people what I need to know to go forward. I don't know if it matters, but I am in the Seattle area and have a VA loan where we put down 0% but have overpaid each month about 10%.
 

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Tim Thompson:

    From the IRS: https://www.investopedia.com/a...

    The big deductions: mortgage interest, depreciation, repairs and improvements, professional services (property management, accountant, etc.), home office expenses (software, marketing signs, etc.), marketing costs, landscaping

    You can talk to a CPA and get some advice. Read the book "Tax Strategies" in the Bookstore, but it ticks me off that they write a book like that and then write a second book with "Advanced" tax strategies!

    The DIY Landlord Book4.7243 Reviews
  • Real Estate Agent · Dallas-Fort Worth, TX · Member since 2021 · 117 posts · 69 votes
    3y

    @Tim Thompson Hi Tim, Congrats on you Investor journey.  Happy to help and answer any questions you may have.  Feel free to reach out anytime.  Sending PM now.

  • Julio GonzalezPro Member
    Specialist · West Palm Beach, FL · Member since 2008 · 4k+ posts · 1k+ votes
    3y

    @Tim Thompson BiggerPockets has some really great books.

    Here's one on tax strategies:

    https://store.biggerpockets.co...

    And here's one on STRs:

    https://store.biggerpockets.co...

  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    3y

    I like NOLO's real estate tax book.

    Cash flow seems okay if you originally got it at a 0% down VA Loan and you are already factoring in reserves such as CAPEX, vacancy, repairs.
    You might cash-flow more if you refinance at a later time that has an overall lower monthly payment.

    Best of luck

  • Homeowner · Seattle, WA · Member since 2022 · 2 posts · 1 vote
    3y

    thanks for all the responses. I have a lot to read. 

  • CPA and Attorney · San Diego, attorney · Member since 2022 · 302 posts · 219 votes
    3y

    @Tim Thompson

    You might find IRS Pub 527 helpful for many of your questions.  Should come up with a Google search.

  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    3y

    There is no secret that will magically reduce your taxes.

    Pretty cut & dried with real estate for the most part.

  • Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
    3y

    @Tim Thompson- thanks ....if you have a  CPA / accountant  that you  use or know - I would  recommend  meeting with them  on your  scenarios 

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