Financing OptionsParent Loan Options: Consider home equity loans, investment property mortgages, or co-signing a loan.Tax Implications: Speak with a financial advisor about potential deductions and capital gains.Rental Income Potential: Explore the option of renting out extra rooms to offset costs.5.

If you’re a buyer, this could be the perfect time to explore new construction.

You have to complete Schedule E if you have rentals.You should check if the turbo tax premier version allows the filing of Schedule E.With that said, using a software like Turbo Tax will assume you to understand what is deductible.If you work with a tax professional, you are more likely to have an accurate return.

@Paige Gardner it depends on the person. hml are my last resource, it's a option for sure. 75% too high for me. that's the game for them, that's how they make its money. don't take it off the table but definitely explore ur options. 

Estimating is both art & science and FWIW most professional estimators rarely get it spot on, usually operating within a Delta.There's tons of estimating books, software etc.

•If your goal is stable long-term tenants, you may want to target young professionals or grad students who stay year-round.4.

Readers are advised to seek professional advice.

It sounds like the reason you wanted to do this was to achieve Real Estate Professional Status. 

Then rent the bigger home out using a property manager, allowing her to possibly cash flow and maintain that asset and let it continue to grow in value.Encourage her to consult with a CPA or tax attorney to explore the best strategy tailored to her situation.