I own a home in California and am relocating to a different city for a job. I do not want to sell my home.?

Question

The mortgage is $2600 and I will probably rent it for $1600. I will be renting a home in the other city. What can I deduct/write off since it will not be my primary residence? Mortgage Interest / Property Taxes / Depreciation?

When I purchased my home, I did not plan on moving to another city otherwise I wouldn't have bought it. Any advice would be greatly appreciated.

Answer 1

Here's what you need to know:

http://www.irs.gov/pub/irs-pdf/p936.pdf

"Second home rented out. If you have a second home and rent it out part of the year, you also must use it as a home during the year for it to be a qualified home. You must use this home more than 14 days or more than 10% of the number of days during the year that the home is rented at a fair rental, whichever is longer. If you do not use the home long enough, it is considered rental property and not a second home. For information on residential rental property, see Publication 527."

So if you plan on renting this house out 12 months out of the year then you need to read the implications here:

http://www.irs.gov/pub/irs-pdf/p527.pdf

Fun stuff... ya, right?

In short - 2nd Home Rented Out 90% or less of the year and you use the rest of the time, then yes you get those tax benefits you know and love.  Full out Rental then you get all the other deductions related to Rental Writeoffs.

When making a move like that I would really advise making a sit-down appointment with a CPA.

Answer 2

You don't have to consult an attorney, unless you enjoy giving large amounts of money to them.  There are plenty of software programs commercially available to help, as well as IRS Publications you can read.  You sound smart.  Do the work yourself.

Answer 3

.    You shouldn't ever "drift" into landlording.  It should be something that you have always wanted to do.  But if you insist:

You deduct the interest  apx $1,200 a month

you depreciate it   Divide the purchase price by 27.5

any expenses and upkeep

Answer 4

Before you move, get your home appraised so you know the correct value on the day you convert it to rental property.  You can deduct your mortgage interest, property taxes, repairs, costs to go back and inspect your home once a year, any management costs charged to rent, property taxes, any capitol improvements (new roof, new carpet..) and depreciation.  Please talk to an accountant about this so you know in advance what receipts to keep, what you can expect in taxes, etc.