I'll be purchasing a Tiny House for short-term rental income. Due to zoning laws 'wheels' would classify it as an RV whereas a placing it on a foundation could classify the structure as a Single Family Dwelling.
Is placing the Tiny House on a foundation the only way to gain the tax benefits of Real Estate Investing?
There's lots to unpack in your question. Real answer: ask your CPA. I don't honestly know if it matters tax-wise if it's classified as an RV or a permanent dwelling for purposes of writing off rental income etc.
However, before you proceed make sure you carefully look into the local zoning laws, which can be a catch-22 for tiny homes. In my research, most permanent dwellings (on foundations) need to be at least 400 square feet, and tiny homes are frequently smaller than that. If it's classified as an RV, you don't have that restriction, BUT many places have restrictions about how often an RV can be "lived in" in one particular place. You'll likely be in a more favorable position if it's parked on land where there's an existing permanent structure (like your primary residence). Most zoning commissions will not allow RVs to be parked on bare land, with certain exceptions (e.g. for periods of up to one year IF a permanent residence is actively being built).
There are lots and lots of tiny home specific webpages and blogs that discuss these issues in depth; I encourage you to look into them, as they'll likely have more specialized knowledge than you'll find on this forum.
1. Often a stationary tiny home is significantly more expensive than a THOW because of extra costs including building permits, architect's fees and generally larger size. In many areas, you will want to get your stationary tiny home built and permitted as an ADU (accessory dwelling unit).
2. What is your time horizon for the investment? And are you investing primarily for cash flow? Or is appreciation equally important? A stationary tiny home/ADU will likely add a lot of value to an existing home/property while a THOW will not. But from a cash flow perspective, you can get a good used THOW for a fraction of the cost of an ADU, so you can recoup your initial investment a lot faster.
I’m eager to see where you land with this and follow additional responses. Good luck!
Definition of a SFH and permit issue on that lot. Each municipality is different.
I am diving into local zoning regulations and meeting with the City Development office and attending Planning and Zoning meetings.
The primary goal is for cash flow. I have an indefinite time horizon. I see no circumstance that would cause me to sell a cash-flowing property, or in this case, cash-flowing THOW.
Again, thank you all!