All Forum Posts by: Matt Vezina

Looking good! Home Possible has a first time buyer requirement so you likely would not be eligible if you owned 6 doors prior to this purchase. Maybe that's why they switched it to FHA.

There is a lot more information about rental property taxes than could be answered in a comment, and it's important to understand that the rental and personal sides of your property get completely different tax treatment.  You should  talk to a CPA if you buy the property and are confused about how to correctly file. 

The way it helps in a house hack situation is by making many of the unavoidable expenses of home ownership partially deductible as a loss against your rental income.  For example, I live in one apartment of a three unit house.  This spring I needed an overgrown tree pruned back from the house.  In a single family primary residence none of that $410 pruning bill would be deductible against my income.  But in my situation 2/3 of that bill is deductible as a maintenance expense against the rental income.  The same is true for all other necessary and ordinary expenses of operating the property including mortgage interest and property taxes. That is one simple example and there is more to actually filing than just dividing your bills in half, but maybe that gives you some idea of the advantages. 

Your experience with section 8 will vary depending on the state/local housing authority in your area.  I've had two tenants in the program who have both been excellent, elderly folks on fixed incomes.  My state's housing authority is easy to work with and the inspections are nothing to worry about unless you're a slumlord.  Keep in mind that the money is not guaranteed in the event of a prolonged government shutdown, and you may not evict a tenant for the housing authority's failure to pay.  

Confirming the status on those underground fuel tanks would be at the top of my list, especially since they are not mentioned in the long list of repairs done.  There's a property like that near me in Southern VT with expired tanks and it's still sitting after a 50% price reduction.  

Check out the Freddie Mac Home Possible loan as well for owner occupied 2-4 unit, it does have a first time buyer requirement and upper income limits. But if you qualify it's a much better loan product than the FHA, I used it to start out in my 3 unit. 5% down on 2-4 unit, conventional (stronger) offer and lower PMI that falls off automatically after 10 years instead of refinancing out with the FHA.

If you are talking about owner occupying a multi family check out the Freddie Mac Home Possible loan, that one allows 5% down on multi and it is a conventional offer unlike the FHA. Less red tape, lower PMI that you don't have to refi out of, much better product. It does have a first time buyer requirement so if you're eligible it should be the first loan you use. Otherwise if you're looking at single family homes then 5% down is allowed on a regular conforming mortgage as Valery suggested.

It depends so much on the housing authority you will be dealing with as the program is administered by state and local governments. I inherited two section 8 tenants and in my state the inspections are a piece of cake, if you're not a slumlord you'll do fine pretty much. It's nice getting a portion of the rent direct deposited on time, and the tenants I have experience with are religious about paying their portion on time. Having the money tied to the government is a double edged sword though, that last shutdown ended a few days before the first of the month but prior to that the answer wasn't completely clear from the state as to whether landlords would be paid on time if HUD remained closed.

I'm used to paying 1/3 or 1/2 up front but for smaller jobs, I do most work myself and hire for specific tasks.  Under no circumstances do I pay out the last of the money with less than 100% completion.  I'm new at this so it doesn't surprise me that contractors want something up front to protect themselves.  Well except for the plumber, we've got more of a track record now so he just works and sends me a bill when he remembers a few weeks later.  I prefer to supply material when it's not something too specialized.  For example the electrical renovation I'm having done right now, it's easier for my electrician to just order the exact type of four gang meter socket they want from the supply house on their account than me try to handle it.  

@Nicholas Aiola you understand the timeline correctly. All these expenses are being incurred prior to the unit being placed back in service, in fact it is down to bare studs right now.  I purchased this property last August with a tenant in the unit, rented it for about eight months and started gutting it after she passed away in March.  So I already filed a 4562 on my 2018 return for the original basis in the property and will be capitalizing this remodel separately.   With that information in mind it sounds like these expenses are part of the depreciation basis, or still not enough info to tell?  

I know you often can't pick and choose where to report but I've read lots of discussion on other threads recently about "as much as possible on line 18" so I'm shooting for that goal within the confines of the law.  

I have a couple questions about reporting expenses for one of my apartments that I am currently doing a gut renovation on.  This will all be reported on my 2019 return so fortunately I am not posting this with a frantic last day timeline.  I want to capitalize and depreciate as much of the project as possible to avoid showing massive expenses on next year's return that will make it difficult to obtain conventional financing for the following year or two. 

-Dumpster rentals exclusively for the guts from this project, capitalize and depreciate or expense, and if expense what category?

-Tools purchased for this project, everything I've bought is under the line for de minimus exemption but again, trying to keep the expenses lower.  Is this a case where I must expense them or can they be rolled into the depreciation basis for the renovation?