Taax Strategies with House Hacking

[Benjamin Branson]

-I plan to start house hacking my 3/2 house when I get back from Deployment. My house is on a VA loan and I plan on renting out 2 of the bedrooms to completely cover my mortgage and to help save money to invest in real estate.

-I was wondering "How" do I take advantage of Rental Property investing tax advantages on my primary residence? Can I write off certain expenses like "Dinner eaten with tenants to maintain happy tenanat relationships" What all expenses could be written off for house improvements or maintenance? Also could deprecation be written off like it is with regular rental properties? Could I place the house in an LLC and then pay myself rent with the other tenants? Would this be better or worse than the tax advantages given to primary residences?

[Natalie Kolodij]

An LLC or different entity will not allow you any additional tax benefits

With a house hack you have a unique set of rules to follow in terms of splitting up expenses and allocations.

You are only allowed to depreciate the square footage that is fully business use, so you can't depreciate your living room sq footage or shared spaces, or your personal bedroom and bathroom. 

In terms of splitting up the mortgage interest, re taxes, utilities ect- that can be allocated by a percentage based on business and personal use, and you can use a reasonable allocation in shared areas. 

Dinner with roommates I don't think I'd be inclined to deduct. It's not ordinary or necessary. 

I do not think that a CFO advisory is necessary. A tax professional who specializes in real estate can easily advise you on money saving strategies.