Investor · chesterton, IN · Member since 2016 · 7 posts · 1 vote
So I own a house solely in my name, and my fiance lives in it with me (still another 1.5 years until we're married, for the purposes of this discussion). If I were to say she was renting from me (creating the actual lease and all other formalities so that it is done correctly, and she would still transfer money to me in the form of a rent payment), can I then depreciate my house, or a part/percentage of it? Also, can certain repairs then be deducted as they occur, as opposed to them being added to the basis when then house is sold? Basically, effectively lowering my personal taxable income from the deductions, as well as her being able to get a tax break on her income from a rental deduction in our state. I'm not trying to be sneaky or unethical, I'm just trying to discover the creative ways that people use to legally lower their taxable income. Otherwise, I would have just done it without asking about it LOL You're insight is much appreciated!
Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
9y
yes,So I do something similar, I rent a house to my family member and I retain 10% use of the house, so I claim 90% of all repairs against the house, so whatever percentage of the house you decide she has will set the percentage of your portion for tax purposes.. and depreciation.
You have to claim the rental income on taxes as self employment, you can still do homestead exemption, You will need to give her a Certificate of Rent Paid at year end.
This is also smart practice if you ever FLIP a house, put someone in the house renting from day one of ownership that's friend or family that's agreeable to basically act as a renter so expenses can be deducted for tax purposes,, they could rent the garage or the shed in the back yard.. just so you can get someone in to get this deduction is huge