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Tax, SDIRAs & Cost Segregation

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Mario Morales
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Do I live in my rental property or not-tax benefits

Mario Morales
Posted Nov 26 2023, 09:13

Hello all, once again asking for someone to shovel me out of the....I am starting to get things ready for tax season and I was asked "Did you live in any of your rental properties during 2023? If so, which one(s) and for how long? 

What are the prod's and cons of living in your multi-unit versus not living in them? Does it make a difference, substially in what you may get back or owe. I have a W-2 job as well. 

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John Underwood
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John Underwood
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Replied Nov 27 2023, 04:36

So if it is a rental property and your living in it you can't take 100% of the deductions. I'm not a CPA but I imagine you'll be prorated on the space and duration you occupy of the whole.

Just answer all the Tax preparer questions truthfully and you'll pay just what you owe without worrying about tax evasion.

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Michael Plaks
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Michael Plaks
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Replied Nov 27 2023, 08:36

@Mario Morales

We can't shovel you out because you don't disclose your exact location, only the general area. ;)

Assuming you're owning a 4-plex and live in one of the units. You divide the property into two: 1/4 personal and 3/4 business. Generally, 3/4 of your expenses are business and deductible.

There's a LOT of details in this situation even if I guessed it correctly. Whoever asked you about living in your properties should examine it and explain it to you.

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Basit Siddiqi
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Basit Siddiqi
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Replied Nov 27 2023, 12:22

Living in a property also allows you to potentially take advantage of section 121 exclusion.
Excluding up to $250,000/$500,000 of gain depending on filing status and ownership.