Investor · Bath, NY · Member since 2015 · 149 posts · 44 votes
Hello all,
Ive recently purchased a duplex and while I know what's deductible for a rental...or has been in the past since the tax reform may have changed all that ( i better study up).....how does this work with a house hack? We live in the downstairs apartment and rent the upstairs...am I able to deduct anything we put into the lower unit or not since we're currently residing there? We will be here one year then will be renting it out. Also, there is a security light out back and we pay for the electricity to the heater in the basement...should this be split in half for deductions? Honestly, with the new tax laws I'm not even sure we will be itemizing but just trying to be prepared with everything.....
@Nicole Wood I am not an accountant. Here is my educated guess. Any money you put into the unit you live in is NOT deductible. It can be added to the basis of the property, so that it can be depreciated over time - once you turn it into a rental. I would split shared items proportionate to the square footage of the two units.
But please double check with a CPA or other accounting professional.
I just finished income/expense report on both properties I owned and for things i'm not sure about I put a brief explanation next to it so that my cpa can further direct us:]
I would figure nothing we put into our unit would be deductible. The square footage of the two units is pretty much the same...will have to figure that out. THANK YOU!!
Make sure you find a CPA with rentals of their own and tell them you want to be as legally aggressive as possible. There are alot of CPA’s out there that are just as afraid of the IRS as any Tom, Dick, or Harry and won't let you write off legitimate deductions. Have you opened a partnership with your secretary of state yet? Audit risk on a 1065 tax return is extremely low which makes it easier to be more aggressive and even take a loss on the rental. I am not a CPA but I'm currently working for one and have my Accounting degree, I just haven't passed the tests yet.