What would you do if you had an extra house laying around?

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tom999w said:
Just following up on this thread: thanks everyone for the great replies; it was definitely a lot to think about. I talked things over with the wife and we're going to do a two year plan. We've decided to keep the house and finish renovating it in the spring, and then rent it out. I'd also forgotten that downstairs originally had a one car garage and a studio apartment. When I bought the house I converted the apartment to a 3 car garage; but did leave the structure (bathroom plumbing, electrical, etc.) intact, in case of future use. That studio also faces the waterfront side of the house, so could be a cash-cow if done right. And the upstairs will be a three bedroom house that will be rented as a single home. Then after one year of renting, we're going to take the rental income (in addition to our personal incomes) and get a mortgage to build a new house and dream garage in Colorado. I also have a military VA house loan that I haven't used, so can apply that to the new house. Then the income from the extra house rental units will pay for the mortgage on the new house. The new build in Colorado will include a separate apartment, and the income from that will also help to pay bills. We are also planning on renting our primary house out in New York, in addition to a four-plex that the wife owns outright in Playa Del Carmen. So in the end, the person that you know in the worst financial shape is right on your screen (me), but I think things will turn out ok in the end and allow us to put food on the table and play with A bodies.
Click to expand...

Do your math regarding the extra, untaxed income.

We had to significantly increase our W4 withholding, or else we would need to make quarterly, estimated payments after being hit with a ginourmous tax bill for the first year.

We will eventually need to do that, once we retire, but I'm not ready to start that yet.
 

Yes good point
I do 1/4 payments ....hurts less
Or open a tax account so you can collect interest before you give your blood and sweat
 
nutz said:
Yes good point
I do 1/4 payments ....hurts less
Or open a tax account so you can collect interest before you give your blood and sweat
Click to expand...
Or doctor the books to make it look like not that much is coming in...
 
Well we do have a extra 1 right next door to the 1 we live in I rent it out to a young couple for a very reasonable price:):)
 
You do get "depreciation" which doesn't show on the books, but it's money in your pocket vs the gov't.
 
...at least for 27 years or whatever the preset rate is.

I guess there's a scam where folks buy/sell/trade income properties between relatives in order to restart the depreciation clocks.

When I bought my shop complex, a tax assessor agent came snooping around, asking the tenants if I was related to the people that sold it, since it had been fully depreciated decades ago.
 
I would say my previous owner depreciated my shop
It was a dump....200k later and just a little less then a dump
 
Tax "depreciation" is not at all related to the actual physical condition of the property.

...although any improvements you make can potentially also be depreciated on separate schedules.

IIRC there's a 9 year schedule and that 27 year.

Sometimes you get to chose which one.
 
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