All Forum Posts by: Justin Littke

I just bought a new house and I will be living in it renting out rooms to roommates.

The mortgage payments will be $550/month. 

Utilities will likely be $400-500/month.

I plan on renting out 2 rooms at $450/month each.

(1) As I understand it, I will not be taxed on this rental income because I am getting no profit from it as it is just accommodating the utility and mortgage expenses...is this correct? ($950 in rentalincome, $950-$1000 in expenses)

(2) Can I also deduct any furnishings I buy for the house as well as any items I buy for repairs? (i.e. Comforter sets, beds, silverware, washer & dryer/ screwdriver, saws, air filters, etc.)

(3) Can I deduct any home improvement made? (getting a contractor to put up drywall etc.)

(4) Assuming I can deduct all these things as well as mortgage interest and taxes will these deductions roll over into the taxes I pay on my job income?

(5) This will still technically be classified as a Primary Residence since I am living in it correct?

Any other advice?

Thank you for any help, I know these are amateur questions but just getting started and want to make sure! If anyone would be kind enough to help me and offer continued help with any further questions that may pop up in the future I would greatly appreciate it!

Thanks very much for all the replies so far!

-I appreciate your post Paul, as I have gone through the school of hard knocks early on and totally screwed up and squandered $ which has given me wisdom. If not for this I would be far more well off NOW but in the long run not as well off or free as I can be now. And yes I am very frugal and only spend on my needs not wants. Ill have more money and time to satisfy wants later. Also..45-50 seems not too far off, time goes by fast! As for being an old fart, age doesnt change or define a person unless they let it.

I am hoping to buy and hold; owning free and clear a handful of properties by 40.

-Yes Jon I had in mind them living there long enough to avoid the tax, sell it and give me the cash.

Hello, I am 25 and just moved to VA Beach and started in REI. I just purchased my first primary home, single family, as a short sale, for 130k that is certainly worth 160k or more (170k or more after I do some simple labor and landscaping; if i invest 20k in additions can sell for possibly 220k however I dont see myself going this route as ill need the capital). 15 yr 3% interest mortgage. Nothing was wrong with the property; so I think i did very well on that buy. I only have 20k and will have only 20k in savings/capital after this as I have no extra $ each month after bills. My plan is in 2 years to buy another SFH as an investment property under a Sole-proprietorship business I'd form. This way I could set up a home office in my primary and deduct business expenses like home office and utilities involved in running it and travel expenses to and from investment property etc. and I assume after depreciation and other expense deductions I would show a loss on paper for the investment property and not pay tax on my rental income.

My goal is very modest, in 15 years to have 20k/year in cashflow coming in and a million dollars networth. This will enable me financial freedom.

My questions: How does this plan sound? Am I not accounting for anything (tax-wise on an investment prperty or business or otherwise?) Also, can I ultimately sell or gift properties to family member for less than the property is worth where they can then live in them for a year and turn arund and sell at profit to get around capital gains? Thanks! -Justin