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Updated over 4 years ago,
Rehabbing to buy and hold and taxes
I am considering purchasing a property that may only need a moderate amount of rehab. I know that the more I fix it up, the more it will be worth, and thus, the more it will be taxed. Is there a sweet spot to aim for or any strategies out there? Here are some thoughts that immediately come to mind, but these thoughts are not fully baked.
If I chose to spend money on things that would make the rental property attractive to renters, but do not need a permit to be pulled, will the city simply continue to tax me based upon the value established by the purchase price?
If I do a full rehab with a high level finish, does the city enter into the property so that they can do a full appraisal and raise the value and thus the taxes as much as possible?
If I do any work that requires a permit first, allow the city to do any appraisal that raises the assessment of the property value and thus the taxes, and then do the cosmetic rehab later, would this be a viable strategy for keeping the taxes down?
Is any of this even ethical? I wonder, as it is really just trying to avoid taxes? Is this underhanded, or is it playing the game by the rules and thus expected behavior?