All Forum Posts by: Clyde Benfer

Hello, I am looking at a large older house that is split into 3 apartments. There is a 1st floor 2 bedroom, 2nd floor 2 bedroom and 3rd floor 1 bedroom (due to 3rd floor being smaller).

On the 3rd floor there is also 1 room that is separate from the 3rd floor apartment. This one room has enough space for 1 bed, 1 dresser, microwave and minifridge. It also has a small closet and a tiny attached restroom with standing shower. The room is probably about 12'x12' and the "Bathroom" about 10'x 3.5". These are very rough estimates.

The overall house is very large. This room/bathroom would make up about 5% of the total square footage of the house I would estimate, probably less.

Ok so here is my question. If I was to buy this property and a few days a week stay in this "room/bathroom" would I have to call it my residence? I would also have a residence at a different location also. Would it affect depreciation and mortgage interest deductions?

The current landlord said she is not legally allowed to rent the room out so it sits dormant due to there not being 2 usable exits and it being on the 3rd floor. The 1 "exit" leads to the door of the 3rd floor apartment. The other leads down stairs to the outside. The room/bathroom could theoretically be added to the 2nd floor apartment she said but they would need a key to get entrance to the 2nd floor apartment. The 2nd floor apartment entrance is on the way down the stairwell to the outside.

Overall, would staying in that room a few days a week make the taxes complicated? or is there a exception for that part of the property because it is so minute?

Thank you for any information you can provide,
Clyde

Hello, I have never purchased a property but am looking at buying one this summer and would like some advice/knowledge.

Background: 3 story Victorian house. 2 bedroom 1st floor apartment, 2 bedroom 2nd floor apartment, and 1 bedroom top apartment.

1. What tax issues would I run into if I lived in the top floor and rented out the bottom 2?

2. The seller told me they were willing to carry a mortgage for me. What are the pros and cons of a bank mortgage vs the seller carrying the mortgage?

3. Monthly payments are a combination of the principle and interest rate. Would it be advantageous to ask the seller to have a lower mortgage on the house and a high interest rate such as 25%? My thought process here is that the monthly payment would equal out at a certain point due to the seller carrying the mortgage they get their money either way (they get the high interest payments). The benefit to me would be that I would get a massive mortgage interest deduction. Is this possible? legal?

The seller is motivated to sell due to getting up there in age and has multiple properties they wouldn't mind selling but the seller is very savvy and has owned a few million $ in properties in the past.

Any advice is well appreciated.

Hello, from the research I have done if a person pays you rent to live in your house it is taxable income. This can take out a significant chunk of money that you would be using to pay down your mortgage.

If the owner of the house pays the mortgage and the other person pays "daily expenses" do the daily expenses have to be claimed as income? Say for example, a friend living at your house would write out checks to pay cable, internet, water, sewer, heating, electric, etc? But not pay "rent" or any of the mortgage?

Thank you for any knowledgeable assistance