Property purchase date and taxes. Better to buy 12/31 or 1/1?
Good evening BP,
I am in the process of submitting a purchase agreement for a 4 unit home that I will hopefully be house hacking. Since we are approaching the end of the year, the closing date is variable and can fall in late December or early January. The title of this thread boils it down to the last and first day of the year for clarification purposes.
I think that buying on January first would be better as you have more expenses during closing that can be written off of the entire year's income, hence reducing taxes.
The only benefit for me (in my situation) to close in December would be that I and trying to display some rental income on my taxes in order to get me a year closer to the standard that banks use to determine if rental income can be included in your DTI ratio. If I show income in 2017, then I am one year closer to the 'two year landlord experience' status. Closing in January I would first show rental income in 2018.
It probably really all boils down to personal goals and situations, but would like to hear opinions from folks if there are any other pros or cons to consider.