shabrese, Home Owner in Columbus, GA

I recently changed my property from my primary residence to an investment property, how do I make it official?

Asked by shabrese, Columbus, GA Wed Mar 6, 2013

My property recently went from being owner-occupied (me living in it but renting out a couple rooms) to being an investment property (where I don't live in it and rent out all rooms). What do I need to do to make this officially happen so it's listed as an investment property and not a primary residence (taxes, gov't, etc)

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The address on your Form 1040 to IRS makes it official as does any other government transaction such as change of driver's license, etc. If you were to refinance the lender would automatically know because the address wouldn't match your tax return's primary address and you would held to the investor standard. DC requires a Basic Business License, good for two years, but not everywhere has something similar. The property now has a different status so it does affect your tax liability in several different ways. Check with a taxation professional for clarification on how this change affects you. While it's mostly positive news there are rules you need to be aware of.
0 votes Thank Flag Link Wed Mar 6, 2013
You may also want to check with your city or county office of regulatory affairs. In DC, for example, you must have a basic business license and a safety inspection in order to rent out a single family home, townhouse or condo. You may also want to let your local tax office know if you had been receiving a homestead exemption when it was your primary residence. Most mortgage lenders only require you to intend to occupy your home for an initial period however you may wish to check that. Otherwise you should be fine. Welcome to the world of being a real estate investor and landlord!

Wayne Johnson
Washington, DC
0 votes Thank Flag Link Wed Mar 6, 2013
You may want to take a step back and think about the impact of your decision in the future as well as in the present. There's a distinction between residency and domicile that impacts taxes paid by your estate (at least in the DC metro area which includes MD & VA) when that time comes and that impacts the ease (or lack thereof) and cost of transferring ownership to your heirs/executor of your estate. You can reside in one place most of the time while being domiciled in another.
Government entities (ex: tax authorities), your lender et al become aware of your change in residence when you change your address on your drivers license, voter registration and the Postal service.

Santiago Testa
Realtor, DC, MD & VA
0 votes Thank Flag Link Wed Mar 6, 2013
The only two "people' who would care, are the IRS, for the deductions, and your Lender, who will probably kick your a-- if you have an loan which specifies OWNER/OCCUPANT!
Did you look at your Loan papers to see?
0 votes Thank Flag Link Wed Mar 6, 2013
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