Real Estate Question(s) - Good Renters Market

[anonymouschris]

Okay, so here is the deal. I am 23 looking to buy a house for tax write off purposes. The problem is I live in San Francisco, CA which makes it very very very hard for me to purchase anything. I am willing to purchase a house(s) out of state, but really want to know where there is renters market (if that is the term used for a location where there are a lot of ppl renting).

I am still very new at this so any advice would be well appreciated.

Thanks

 

[FrustratedUser]

Originally posted by: anonymouschris
Okay, so here is the deal. I am 23 looking to buy a house for tax write off purposes. The problem is I live in San Francisco, CA which makes it very very very hard for me to purchase anything. I am willing to purchase a house(s) out of state, but really want to know where there is renters market (if that is the term used for a location where there are a lot of ppl renting).

I am still very new at this so any advice would be well appreciated.

Thanks

My friend has a house in AZ and now lives here in VA and he can not deduct the interest as before because he doesn't live in it (or it's out of state, forget which one).

Sounds like j00 = S0L

 

[anonymouschris]

i know if the house is not owner occupied i can't take advantage of the capital gains tax exemption from selling the house after holding the property for 2 years. but as far as i know all interest on houses are tax deductable regardless of the state i own the property in right? i mean, if i have renters income i will get charged tax for that so it only makes sense that i can write off my interest. not sure though...just my thoughts.

 

[FrustratedUser]

You might even have to file tax in the other state, but that is just coming straight from my a$$.
Didn't know about the capital gains exemption.
Honestly I am not sure what it is but he's complaing about not being able to do the same deductions as before.

 

[dullard]

<- I'm not qualified for giving tax advice, check the stickied thread at the top of Off Topic for people who are.

You are allowed to deduct mortage interest on your main or secondary home. What you are doing won't be your main or secondary home. Thus it doesn't sound like it would qualify for a itemized deduction from your income taxes. What it does sound like is a self-owned business. If that is the case, then you can deduct the interest as an expense for your business. That is, in the long term you can only deduct up to the amount you get in revenue from the rent.

I'd say this is something I would avoid if I were you. If you want to start out in real estate or being a landlord, why not try something local?

 

[anonymouschris]

what counts as a main and secondary home? and no, this is not intended to be a business, but investment property. i have a full time job right now and would like to invest in real estate rather than mutual funds, savings, etc.

 

[cheezy321]

Get a house near a university. I live by Arizona State University, and everyone rents out here....

 

[farmercal]

I have a home in Florida (I'm living in) and a home in Georgia that I am renting. You allowed to deduct interest from no more than two homes for tax purposes. Some people have rental property as their second house, some people have a house boat, and some people have a RV. If have a third home, that interest cannot be used for tax purposes. That's how I read the tax laws (which are Federal by the way, not State).

 

[anonymouschris]

thanks for the tip. so how much do homes go for in FL and GA? and what do they rent for? are they easy to rent out?

 

[farmercal]

I live in Crestview (near Fort Walton Beach) and my home costs $140K about a year ago. Today it's worth about $180K or more. I don't why the market has taken such an upswiing but glad it did. I was just in the right place at the right time when I moved here. You can buy a home around here for anywhere from $100-750K, depending on what you can afford.

 

[drnickriviera]

Just from my experience here in Memphis (Bankrupcy capitiol of the US) Things are in a frenzy right now. People are paying too much for homes due to interest rates going up. I buy HUD and VA foreclosures. I can usually bid 7-10% under their asking price when investor bidding starts. People are now bidding at or above asking price.

Are you prepared for 0 to negative cash flow? All it takes is 1 bad tenant to eat up all your profits for a year.