Tax and Legal ConsiderationsUnderstand the tax implications and legal responsibilities associated with rental income.

From a tax perspective, you'll want to take what you paid for the property plus calculate the improvements you made to the property during your time of ownership.

Then there’s this glorious tax season where you realize how many things you get to deduct that others can’t, while sheltering your income with depreciation, and earning tax free income with appreciation.

(gross rents $4900; 8% PM; mortgage+insur+taxes = $3600/mo).

I had to redo everything they did on my taxes. 

The contributions are lower so it takes a while to build, but once you do, it's tax-free investing. 

You're giving up some good tax benefits since you're in the tier of taking itemized deductions.

Instead of evicting them, i was thinking is there some way that I could rent it back to him for very cheap (mainly to cover just the taxes/ insurance) ie 2k a year rather than the going rate of 2k a month for similar properties.

I'm assuming you are arriving at your cash flow number by applying Gross income - cap ex, maintenance, utilities, vacancy, tax, insurance, mgt, landscape/snow & Debt service?

However , properties taxes are due like roughly 12k for the two lots.