I want to rent my current home and lease another for two years with owner financing with giving up my current home. Is this possible and what might be the tax implication? Thanks for the help.
2007-11-27 15:41:08 · 5 answers · asked by jamlynne 3 in Business & Finance ➔ Renting & Real Estate
I want to rent my current home and lease another for two years with owner financing without giving up my current home. Is this possible and what might be the tax implication? Thanks for the help.
2007-11-27 15:42:36 · update #1
People do it all the time, if you are not under the VA program. Most of the time you don't even have to get permission from your financial institution. The tax situation could even be helped, because you still count your taxes, and any money for repairs, advertisement etc are tax deductible. VA will not allow you to rent your permanent residence, if you did and they found out they can cancel your loan. If you still worry I would ask your loan institute first. Good Luck!!
2007-11-27 15:58:16 · answer #1 · answered by Anonymous · 0⤊ 1⤋
Yes, you can rent anything you own. In Michigan, we have whats called "Homestead Exemption Tax". It's where your primary residence is only taxed at 1/2 the actual value. Therfore if you rented it, the home would no longer qualify for the exemption. This means it would have tremendous tax implications. Example: Tax on your home is 6,000.00. Homestead it (primary residence) and pay 3,000.00. If this were not your primary residence, and you paid the full 6,000, how long would it take you to make up the difference renting it, as opposed to keeping it. If you were renting it for 1,000 a month, it would take 3 months to break even on the tax situation.
2007-11-27 16:08:07 · answer #2 · answered by maplewoodjoe 4 · 1⤊ 0⤋
If you rent out your current primary residence it no longer will be your primary residence. The place you live is your primary even if it is a rental.
As long as you did not acquire your current home under owner occupying status with the intent of renting it out (you did live there, right?), you will be just fine; even if your current loan is a VA: http://www.vamortgagecenter.com/faqs_eligibility.htm#two_mortgages
2007-11-27 16:29:52 · answer #3 · answered by Anonymous · 0⤊ 0⤋
If you have a mortgage on your current home, check to make sure it allows this. If so, you should be OK. You'll pay income tax on the rental income, and any depreciation claImed or claimable will be subtracted from your basis.
2007-11-27 15:46:57 · answer #4 · answered by Judy 7 · 1⤊ 1⤋
you should be able to
2007-11-27 15:43:59 · answer #5 · answered by mishkin 5 · 0⤊ 0⤋