Property Q&A in Sea Bright>Question Details

Beez, Real Estate Pro in Sea Bright, NJ

How do I turn an investment property into a personally owned property?

Asked by Beez, Sea Bright, NJ Sun Apr 11, 2010

I own a condo that I have been renting out for 8 years. I now wish to use it as a summer vacation home for myself. What am I looking at as far as laws,taxes, and anything else is concerned?

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6
Beez you can ask ur accountant, but as far as taxes, it doesn't matter if you call it ur vacation home or investment property-u pay taxes on the income it brings in and write off expenses based on how much of the year it was rented.
@ Deborah Madey I'm amazed at how much you can write without contributing anything valuable.
If u don't know the answer then don't bother. Why not ask if Beez has owned a cat or dog in the past 12 months?
1 vote Thank Flag Link Sun Apr 11, 2010
One other thought... for tax purposes it might be advantageous to consider renting the unit out as a winter rental (if the HOA allows for rentals less than a year) and keep it for your personal use during the summer. Again, ask your accountant and confirm that you can do short term rentals... some Sea Bright condo associations allow it, many do not. Be aware that winter rental demand is generally not great but if you price it aggressively you can often find a tenant and defer some of your costs. You would have to be comfortable with a tenant using your personal furniture as well since moving in/out twice a year would probably not be desirable. Many owners in Monmouth Beach's Wharfside condo complex to this.

Thomas McCormack
Sales Associate
Resources Real Estate | 112 E River Rd | Rumson, NJ 07760
732-212-0440 x212
0 votes Thank Flag Link Wed Apr 14, 2010
Beez,
It shouldn't be much of an issue to begin using the condo for personal use. I believe Sea Bright has a landlord registration requirement -- if you are registered as a landlord, you may want to notify them about a change of use. Tax-wise, I'd defer to your accountant, but if you've been claiming rental income and using the property for deductions, that may now change your bottom line. Lastly, many condos' HOA regulations require notification and/or approval if the unit will not be owner-occupied; you should let them know that it now will be.

Hope that helps... if you need further assistance please let me know.

Thomas McCormack
Sales Associate
Resources Real Estate | 112 E River Rd | Rumson, NJ 07760
732-212-0440
0 votes Thank Flag Link Wed Apr 14, 2010
Beez,

As far as mortgages are concerned, if you use it as a vacation property for the summer then you are able to get more or less the same rates and terms as with a primary residence should you decide to refinance. You can still rent it to others while you aren't using it and it would be considered a vacation property as opposed to an investment property.

Also, in regards to taxes, if you continue to rent it, then you would have to inform your accountant so he can adjust your expenses accordingly-if you use it for personal for three months, then one quarter of the taxes, insurance, etc are not tax deductible because they are no longer a business expense.

Hope this was helpful.


Good luck.
0 votes Thank Flag Link Sun Apr 11, 2010
Hi Beez
I don't think there should be any concern about living in a condo that you are the sole owner of. Once your tenants lease has ended & they have vacated you can use it as a 2nd home or a primary home for your own use You should check with your accountant to see how it affects your tax bracket. Every persons situtation is different..
0 votes Thank Flag Link Sun Apr 11, 2010
Hi Beez,

I am your neighbor and a real estate broker. As a broker, I am unable to provide legal or tax advice. But, I can point you in a direction or two that might be helpful.

You can email me...or post here....

What will you do w/ it after summer since you said summer rental?

Is it currently occupied by a tenant? How long has the tenant been there?

Which complex? And, that, really is my curiosity and my comments about ease of ability to rent again...if you are able to and do take possession as an owner-occupant as winter rental, or year round rental.

Deborah Madey - Broker
Peninsula Realty Group
732 530 7755 Main
Deb@PeninsulaFirst.com
732 784 8450 Mobile
0 votes Thank Flag Link Sun Apr 11, 2010
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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