Thinking about buying a duplex...

[DaveJ]

Got a few questions though, for those of you who have been landlords... Thinking about buying one to live in, and to rent the other unit to my sister. What does this do to my tax situation? I assume she'd still need renters insurance, how would I go about finding out about that? Could I just have her pay me a certain amt. monthly, without having to deal with all that other stuff? If I did, would she still be covered under my homeowners insurance? This would be my first house, and I'm trying to decide whether it'd be worth it...

Dave

 

[Mday]

Thinking about buying one to live in, and to rent the other unit to my sister.

i don't recommend renting out to siblings. why don't you two just "share"? that is, she buys the other unit from you.

my parents own a 4 family house. we live in one of the units. the rent doesn't even cover our mortgage =(

What does this do to my tax situation?

the house becomes a business. and the rent you receive is income. anything you do to the house in terms of rennovations can (depending on certain laws) be considered business related, as in a loss. the cost of the house, or how much of the mortgage is paid off, is how much the business is worth (pretty much).

I assume she'd still need renters insurance, how would I go about finding out about that?

speak to an insurance rep.

Could I just have her pay me a certain amt. monthly, without having to deal with all that other stuff?

yes, but a lease is better since things can get messy. $$$ and family don't mix. and don't forget about utilities.

If I did, would she still be covered under my homeowners insurance?

depends on the policy as far as i know.

This would be my first house, and I'm trying to decide whether it'd be worth it...

good luck.

--

the federal reserve lowered interest rates, so it is a better time to buy. but the fed may lower them again, which makes it an even better time to buy.

my parents missed out when the interest rates were really low several years back, it was a great time to refinance our mortgage.

 

[Yo Ma Ma]

Renters' insurance covers contents only, not structure.

 

[PCAddict]

If you are going to rent to a family member, make sure you have a formal lease signed. A friend of mine was stupid enough to buy a house and rent it to his sister. She decided on a whim to pack up and move to Florida, leaving him with a mortgage and no tenant. Luckily, he was able to rent the palce out again quickly.

 

[DaveJ]

Mday: Yeah, I'd split the cost of the house with her, but she can't afford to buy much right now... I'm not sure also about sharing the cost... what happens when I decide to sell the house? She couldn't afford to pick up the rest of the mortgage if I did. Renting to her would be easier I think...

I hadn't counted on the lower rates, but it IS a good time to buy, and I'm looking forward to it!

Yo_Ma-Ma: That's what I figured. So in theory any structural damage to the house (even if it's to her unit) would still be covered under my policy.

PCAddict: Yeah, that's what I'll probably do. It also makes it easier on me when I decide to sell the house (probably 5-6 yrs from now). I don't think there's much chance she'd run off though, and if she did I could easily pick up the extra cost. I'm not planning on relying on her rent to pay my mortgage...

Dave