All Forum Posts by: Nick Morgan

Thanks for the reply, @Ashish Acharya. Just to clarify - it sounds like any improvement I make to my own unit can be fully deducted (at the lesser of the basis or FMV), under the standard depreciation schedule, starting the day I move out?

I owner/occupy a duplex. I have two questions:

1. 1. Let's say I replace the roof, depreciate over 27.5 years, and move out exactly 2 years later. During years 0-2, I can only deduct 50% of this depreciation. Am I able to deduct 100% of the depreciation for years 2-27.5?

1. 2. If I replace the kitchen cabinets in my unit, and move out 2 years later, am I able to deduct the depreciation of those cabinets during years 2-5?

I like the neighborhood I live in, and dislike renting. Owner/occupying ("house hacking") a duplex seemed appealing, until I started doing the math:

• $400,000 mortgage
• $1,500 rent per unit
• $1,370 mortgage payment (with a 20% down payment)
• $1500 in all other expenses - excluding a property manager (insurance, taxes, utilities, 5% vacancy, 1% maintenance budget, 1% reserves budget)

Owner/occupying seems to work out nicely - the other unit pays for the mortgage, and I budget roughly $1,500 in expenses - which is a little below what I currently pay in rent. I also will build equity in the property, and I have some utility in owning vs renting.

Moving out is where things seem to fall apart - if the estimates above are correct, my cash flow would only be $65 per unit. This seems to be far below the rules of thumb I see posted on here.

Am I looking at this the right way? I do want to own a house & stop renting, but the low cash flow seems concerning, and I don't want to rely on appreciation to save me.