And don't forget about rent control in Oakland. You can see the regulations online - check Google for "Rent Adjustment Board - City of Oakland - Official City Website". You can join RHANAC to help you with your rental questions.

And after you consult with your CPA, here are some of the things you should know, or think about:

1. Wil you indefinitely rent out your flat? If you don't live in it for 2 out of the last five years before you buy or sell another residence, then your flat may be considered as investment property and not as your primary residence

2. As such, should you try to sell if later, you may be subject to other taxes (if the property appreciated considerably, there are capital gains to contend with). HOWEVER, you may be able to defer those taxes if you buy a replacement property under the 1031 Exchange guidelines, Here's a good link to check out http://www.1031.org/about1031/faq.htm

3. If you generate enough income (declared net income less expenses of maintaining/managing the property) that warrants your keeping the property as a rental, this may be your stepping stone to investing more in the future

4. Or...at some point in time, you decide that you'd like to be a homeowner again, you can also go back and live in the property again. (Then after living in it for 2 out of 5 years, you can think of selling and getting another home).

There's a really good and easy-to-read book that you may want to get: David Bach's The Authomatic Millionaire Homeowner http://www.finishrich.com/books/automaticHO_brandhome.php

Good luck!

I am a real estate investor if there were not any advantage of owning X properties no one would invest .

Confer with CPA, when you own any property you receive annual tax benefits, property increases in value, tenant pays cover all your expenses, plus more based on current market value.

Many pro's and con's of owning properties

Good luck

National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
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Lynn911

http://www.lynn911.com

Hello Scarabic and thanks for your post.

Rental income would be reported as ordinary income on your tax returns. However, that income will be adjusted by expenses relating to maintaining the property, such as repairs, painting, and (something that is not currently tax deductible) homeowners association fees. You would also get depreciation (something that you don't currently get) on the home, which helps defray the cost of the property even more. The interest expense paid on the mortgage, which is currently reported as a Schedule A expense and is limited or reduced by your own AGI would become a dollar-for-dollar reduction against your rental income.

As Eric has already noted below only your tax or financial professional can give you advice on your personal financial situation, however, there are benefits to owning rental property and the rental income would be offset by expenses and would not be considered, in its entirety, supplemental income. Good luck!!

Sincerely,
Grace Morioka, SRES, e-Pro (and Ex-Accountant)
Area Pro Realty
San Jose, CA

First, consult with a tax attorney or an accountant, but since the rent would be income, yes you would have to pay taxes on it, but talk to a specialist about your situation.

Good Luck