Live in SFH House Hacking - Tax Implications
Hi all,
Found a blog post addressing this from back in 2016, but not anything since the major tax code upheaval.
In a situation where we'll (husband, toddler & dog - military family) be somewhere for just one year, we were going to just purchase a house and then rent it out when we left, but the numbers aren't working. Rents are just a bit too low compared to purchase prices. I was thinking about renting a room out for extra money and realized tonight that if I just fully embrace house hacking it might make things easier.
Currently considering a 4+ bedroom house with a master suite on the first floor / or on a separate side of the house if it's a ranch plan, and we'll rent out all other bedrooms. I figure I can do anything for just a year, and we do have experience with another adult living with us - as that's pretty normal here in NYC.
5% on a house this size is just under to the 20% I was considering for a smaller home. If I do this right, I'd hope to find a house where I can for a little equity to make up for that lower down payment, or we could overpay the mortgage to get our equity up. Most importantly, we'd have a little extra capital available to buy a separate investment property to flip or BRRRR as well.
But I'm wondering if the 1 year residence will trip us up. Can anyone advise, theoretically? Just point me in the right direction to research. If we do this we will review things with our tax person but we just haven't found that person yet.
We would live there 1 year, and then just rent the master suite to someone else when we leave. What's going to potentially trip me up?
Thanks!