Hey BiggerPockets community,
I Just closed on my first porperty. It's a 2 bedroom that I have turned into a 4 bedroom. The property will be a student rental when I move out, but I plan to live here until I find another deal. Until then, I'll be househacking this property.
I have 3 friends who have verbally committed to paying monthly rent for 11 months. I have some questions regarding this situation.
Question 1: Would it be in my best interest to create a lease for my three roommates?
Question 2: Would this lease be different than a lease I would provide to people who DON'T live in the same property as myself? By this, I mean is this contractual agreement different than what is considered a lease?
Question 3: What are the tax ramafications of doing this kind of agreement?
-Have all three roommates sign lease agreements just as you would if you were renting the whole house to them. Some of the terms of the lease would be unique to your situation.
-you would be able to treat the parts of your house you are renting out as rental real estate and you will be able to deduct and amortize expenses incurred for your rental business.
Congrats on the new property!
Expenses are deducted on a proportional ratio on Schedule A/Schedule E. So, probably the cleanest method is to prorate based upon square footage of the leased space.