All Forum Posts by: Gabe C.

I closed on my first rental on my new plan and secured a tenant to move in in April. I want to make sure I start things off on the right foot and make them feel welcome, but I also don't want to overdo it. I was thinking of a gift card for a dinner or maybe a place like Target for supplies in a card or gift basket. What sorts of things do you guys do for your new tenants? I remember when I moved into apartments when I was younger, sometimes I'd find a bottle of wine or chocolates or a cheese basket, and it always made the place feel a little warmer.

So, I met with my CPA and he poo pooed this for my situation. He said I would need to collect market rent for it to be viable with the IRS, and even if it were market rent, the most it would do would give me losses to carry forward. The write offs would only offset my rental income, not my earned income, which at best would put me in the same situation I'm already in. This is the case for my particular tax bracket. This apparently wouldn't be the same for everyone. The fact that my mom is the tenant would also be a major red flag. Oh well.

@Blake Meester @Dave Toelkes That makes even more sense... using the tax assessor info to figure out the proper ratio, and then apply that to my FMV at the time of purchase/conversion (or adjusted basis, if that's lower). So common sense, I'm annoyed I didn't think of it. :)

@Steve Vaughan yeah, I guess it seems like the safest route. thanks for your input!

I'm working through some tax prep, and was trying to get to a depreciation value to use on secondary that I converted to a rental. The value assessed by the county is easy to find/use, but my property is worth more than the most recent assessment, and I feel like I might be leaving some money on the table if I use it. I remember reading that I could use my appraisal from the time of purchase, but I just went through the appraisal, and it doesn't separate the value of the land/property the way I need it.

Should I just use the value on the tax assessor site, or is there another way? Are there any rule of thumb formulas like 30/70 that the IRS will accept? The difference in value is only about 3% (divided by 27.5), so maybe it's not worth quibbling over...

Good luck getting started! Nice to have more Raleigh investors around. 

@Dawn BrenengenI think I may do the same! 

@Nnabuenyi Anigbogu@Charles WilliamsThanks, guys. That makes a lot of sense and sounds like what I was thinking/hoping. As far as changing its status at tax time, the only thing that seems slightly weird is that my mom isn't paying market rent... so it would be much easier for me to take a "loss". I guess my CPA can advise me there. 

Thanks. I meant statute of course. Autocorrect on my phone! I've been tearing through real estate books recently, and seen a few spots where it seems like that could happen, but isn't guaranteed. I'm not sure what the trigger is or if you can just talk to your bank to discuss the possibility or what. I'm also just curious if it qualifies as an investment home. If not, that point is moot. :)

I've had a TH in Raleigh since 2007 that I purchased as a second home for my visits to family. My mother also stays there. In the last couple of years, I've gotten married and had a son. Too many of us now to take the top bedroom on visits and we have to AirBnB it. My mom covers my mortgage and HOA in exchange for living there, but she only pays the minimum to cover the bills. Market rent is roughly 2x what she's paying.

I've recently questioned whether I should just convert this to a rental for tax purposes. I do a lot of work on the house, travel to the house, etc and it would be very advantageous to get those tax breaks. Does this sound like a good idea? Can my bank call the loan if I change the status or is the statue of limitations on that up? I've searched around, but aside from what you claim on your tax returns, I'm not aware of anywhere else this needs to be made known. Does the fact that my mom isn't paying market rent disqualify it? If so, what category is this house if I don't stay in it any more?

I see my CPA in a month, but I was wondering if anyone here had ideas on a way to make this place do more work for me. Thanks! :)