Rental Property Investor · Jersey City, NJ · Member since 2013 · 88 posts · 7 votes
I own a 2 family house in NJ. Currently if I make any repair in the house I can only deduct half of it on my tax return since its 50% owner occupied and 50% rented.
If I open an LLC will I be able to deduct 100%? is it worth it?
Will I be able to do that with my current FHA mortgage?
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
12y
A LLC is a pass through entity for tax purposes unless you elect special tax treatment. So it would have no effect. You can only repairs on the rented unit. not on your residence. That doesn't necessairly mean you can deduct 50% of all repairs. A faucet replacement in the rental would be 100% deductible while the same repair in your unit wouldn't be deductible at all. A new roof, OTOH, wouldn't be "deductible" at all. Rather it would add to your basis and increase your depreciation. Which is limited because you occupy one unit.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
12y
A LLC is a pass through entity for tax purposes unless you elect special tax treatment. So it would have no effect. You can only repairs on the rented unit. not on your residence. That doesn't necessairly mean you can deduct 50% of all repairs. A faucet replacement in the rental would be 100% deductible while the same repair in your unit wouldn't be deductible at all. A new roof, OTOH, wouldn't be "deductible" at all. Rather it would add to your basis and increase your depreciation. Which is limited because you occupy one unit.
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
12y
@Mina G. , if you move out of the duplex to be able to claim all expenses from both sides, you may lose some lower tax rates if you sell the duplex. If a house is your primary home for 2 out of the last 5 years you usually (there are exceptions) get special tax treatment. Keep that in mind if you intend to sell in the next few years. Good post @Jon Holdman .
Rental Property Investor · Jersey City, NJ · Member since 2013 · 88 posts · 7 votes
12y
Thanks a lot Jon.
Jerry I'm just trying to get information to see what's my best option for my current situation. I definitely wouldn't move out for this especially that I haven't had any major expense But I will keep this in mind. Thanks a lot!
I own a 2 family house in NJ. Currently if I make any repair in the house I can only deduct half of it on my tax return since its 50% owner occupied and 50% rented.
If I open an LLC will I be able to deduct 100%? is it worth it?
Will I be able to do that with my current FHA mortgage?