Q. We're thinking about moving to another city and have considered renting our house out as oppose to trying to sell it. I wanted to get a few viewpoints on renting out a home in this economy.
A. The landlords I know have not had any problems finding tenants if the rent was comparable to others in the area. You might have to relax your standards, few people have great credit, because of the economy, many people have charge offs, bankruptcies, or other negative issues on their credit report.
What are some things to think about before renting out your home?
Q. We are considering renting out our house but we have questions about what to do. What tax implications, if any? How to report rental income? What to do in preparation for renters?
A. First thing to consider is making room for the renters by moving out. :)
Preparation:
1) Set aside some money for maintenance. Since you've lived in the property, you probably have a pretty good idea of what annual maintenance costs have been. Add some to this amount, because renters just don't take care of the property the same as you.
2) Finish any projects on the property that you can before leaving. It just isn't as easy to work on it when there is somebody else there. The renters have rights, and you can't unduly inconvenience them. You'll also be working around all of their stuff, but you can give them instructions to clean areas and move furniture if you'll be doing work.
3) Once you are out, take some pictures of the property and rooms. These are just for liability sake in the case that you do need to prove the previous status of the building for any reason.
4) If you already are owner of a business. Quitclaim (ask your title company about the process) ownership of the property into the name of your business. If you don't have a business, ask your accountant what structure they recommend for your situation and your state.
5) If you don't already have an accountant, find one. They have a huge amount of information to provide, and many will speak to you without a fee in hopes that they will become your preparer. Think of a couple people you trust who are also involved in real estate investing. The are a lot of rosy talking accountants out there who just don't do a good job, and you can usually find a great person by a referral. Also accountants tend to differ in the way they approach taxes, and yet all can be doing a great job. If you interview more than one, don't be upset by differing opinions, just settle with the one that makes sense to you.
Tax Implications:
This is an interesting subject, and there is a lot of information to cover. You absolutely want to find an accountant who is familiar with investment properties. A few things to have on your mind:
1) Mortgage interest for an investment property is tax deductible. However, the income from the property is taxable. Typically your income is going to be higher than your mortgage expense.
2) Depreciation is an art. You can depreciate everything nearly everything in the rental: Structure, Lights, Curtains, Appliances, etc. However, there is a limit to the amount of depreciation you can show for a year unless the property is in the name of your business. This isn't usually an issue until you own a very large property or more than a few small properties. It also isn't an issue if you structure the ownership properly - A property owned by a business is under the same limitations.
As far as reporting the information goes, I would not tackle this problem yourself. As a real estate investor, you will find that you save far more money in taxes using an experienced accountant than you will by avoiding paying an accountant's fees.
Good luck!
Preparation:
1) Set aside some money for maintenance. Since you've lived in the property, you probably have a pretty good idea of what annual maintenance costs have been. Add some to this amount, because renters just don't take care of the property the same as you.
2) Finish any projects on the property that you can before leaving. It just isn't as easy to work on it when there is somebody else there. The renters have rights, and you can't unduly inconvenience them. You'll also be working around all of their stuff, but you can give them instructions to clean areas and move furniture if you'll be doing work.
3) Once you are out, take some pictures of the property and rooms. These are just for liability sake in the case that you do need to prove the previous status of the building for any reason.
4) If you already are owner of a business. Quitclaim (ask your title company about the process) ownership of the property into the name of your business. If you don't have a business, ask your accountant what structure they recommend for your situation and your state.
5) If you don't already have an accountant, find one. They have a huge amount of information to provide, and many will speak to you without a fee in hopes that they will become your preparer. Think of a couple people you trust who are also involved in real estate investing. The are a lot of rosy talking accountants out there who just don't do a good job, and you can usually find a great person by a referral. Also accountants tend to differ in the way they approach taxes, and yet all can be doing a great job. If you interview more than one, don't be upset by differing opinions, just settle with the one that makes sense to you.
Tax Implications:
This is an interesting subject, and there is a lot of information to cover. You absolutely want to find an accountant who is familiar with investment properties. A few things to have on your mind:
1) Mortgage interest for an investment property is tax deductible. However, the income from the property is taxable. Typically your income is going to be higher than your mortgage expense.
2) Depreciation is an art. You can depreciate everything nearly everything in the rental: Structure, Lights, Curtains, Appliances, etc. However, there is a limit to the amount of depreciation you can show for a year unless the property is in the name of your business. This isn't usually an issue until you own a very large property or more than a few small properties. It also isn't an issue if you structure the ownership properly - A property owned by a business is under the same limitations.
As far as reporting the information goes, I would not tackle this problem yourself. As a real estate investor, you will find that you save far more money in taxes using an experienced accountant than you will by avoiding paying an accountant's fees.
Good luck!
Ideas on how to keep garage air tight?
Q. We are renting our house but want to convert our garage into living space. I need ideas on how to keep air from entering the garage through the garage door. There are gaps between the sides of the door. Thanks!
It has to be a temporary change.
It has to be a temporary change.
A. I've used a weather stripping kit made for overhead garage doors. Kit consists of heavy "rubber" tube-like strip which is fastened to the bottom of the door and compresses to conform to the floor's irregularities and two (I'll think of them as "fins") strips which are fastened to the door's jambs on either side and seal the gaps there.
OR: If you are dealing with an overhead door you may be able to loosen and adjust the tracks to make the door fit closer to the structure of the opening.
OR: If you are dealing with an overhead door you may be able to loosen and adjust the tracks to make the door fit closer to the structure of the opening.
Can a renter go without paying rent for 3 months after being asked to vacate?
Q. My mother gave the woman that rents our house a 3 month notice and after the 3 months were up she told my mom that she can 3 months without having to pay rent she even had the nerve to ask my mom for a recommendation after she trashed our house..
Can she have a 3 month free ride?
Oh yeah this is in Southern California
I don't be a dick just want answers. Why must everyone insist on ranting?
Can she have a 3 month free ride?
Oh yeah this is in Southern California
I don't be a dick just want answers. Why must everyone insist on ranting?
A. Unfortunately, yes, because your mom will have to file a formal eviction notice and it usually takes that long to get it through the court system and have the sheriff come physically remove her from the property and put her crap on the street. Apparently this tenant has done this before and knows the system.
Powered by Yahoo! Answers
No comments:
Post a Comment