Home Buying in 11415>Question Details

rssraj, Home Buyer in 11375

2 family home pros & cons

Asked by rssraj, 11375 Fri Jun 22, 2012


What are the financial implications of buying into a 2 family home?

1) I know you can only take approx 50% of the home for the mortgage property tax deduction

2) How about the rental income you collect? Do you have to pay taxes on that at your income tax rate?

3) Also, how much should I keep aside for fixes for the rented 2 bedroom unit (1000 sq feet). I'm not handy at all but will learn how to fix basic leaks, electric conditions but nothing too complicated. The whole home has been updated with new boiler, new electrical


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Mohammad Pasha’s answer
Income tax related question can be best answered by you accountant. There are home warranties available for home buyers like you in case of unforeseen break down of major appliances or heating equipment. But you do not have to go crazy about it. If everything is updated then I would recommend $1000 set aside for any emergencies.
0 votes Thank Flag Link Sun Jun 24, 2012
Consult with your tax professional regarding any tax matters; you pay taxes on rental income; however you will also have deductibles...
0 votes Thank Flag Link Fri Jun 22, 2012
First, my experience has shown multiple family homes sell for less than single family ones. Which probably makes a lot of them good buys (and bad sells). You pay taxes on rental income at the usual rate; it's part of your income. However, you will be allowed to make certain deductions, such as the expenses of fixing it after a tenant leaves... and so on. How much you will need to set aside for repairs depends upon the quality of tenant that you get. 10-15% might be a general figure. It's better to set aside more than you need than to come up short. Eventually there will be a big one, such as the roof, hot water heater...
0 votes Thank Flag Link Fri Jun 22, 2012
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