When does Residential become Commercial?

[N/A N/A]

Hello all. For some reason I am thinking that I heard somewhere that anything over 4 units is considered commercial, but my realtor told me that anywhere someone lives is considered residential, no matter how many units there are? What is the rule on this, or does this vary from state to state?

Thanks,

Mike

[Jon Holdman]

Depends on what question you are asking. For loan purposes, anything over four units needs a commercial loan. Residential loans only work for 1-4 unit properties.

If you mean for IRS depreciation purposes, residential is anything people live in and gets a 27.5 year depreciation period. Commercial is offices, retail, industrial, etc., and gets a 39 year depreciation period.

Jon