The owner-occupied duplex tax shelter
- half of my homeowner’s insurance
- half of my mortgage interest
- a portion of my cell phone bill
- half of all repairs/maintenance I did on the exterior of the house
- half of my water bill, and a portion of my gas bill (since the water heater, for the whole house, is on my gas bill)
- half of my property taxes
- most expenses directly related to running/maintaining the duplex — cleaning/maintenance costs, advertising, repairs, etc.
- my rental license fee
AND
the big one…..
I was able to depreciate half of my house (the rental part). I’m writing off a portion of the value of the house every year (half the original purchase price, spread over 27.5 years), as though it were being “used up” by being rented out — while in fact, it’s appreciating in value.
Depreciation, and the other deductible expenses more than offset the income that I receive from rent, and give me a much bigger tax refund than I would normally get.
Sure, it’s harder than filling out the 1040EZ, but if you can file online, it’s not so hard to figure out.
Related Articles:
- Taxes - the forms aren't hard, it's tracking your expenses
- It's beginning to look a lot like ... time to do my taxes...
- Do It Yourself Refinancing
- Pros and Cons of Owner-Occupied Duplex Living
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Entry Filed under: Buying a Duplex, Financial, Taxes
Technorati Tags: rental duplex rental property investment property owner occupied owner occupied duplex tax shelter tax credit income loss repairs supplies improvements depreciation appreciation expenses half duplex nondeductible offset rental income schedule E taxes federal irs tax tips tips
2 Comments Add your own
1. Vitaly Gnatyuk | June 7th, 2008 at 4:04 am
“I was able to depreciate half of my house (the rental part). I’m writing off a portion of the value of the house every year (half the original purchase price, spread over 27.5 years), as though it were being “used up” by being rented out — while in fact, it’s appreciating in value. ”
27.5 years is great, but you can/could make it better. Land improvements (sidewalks, fences, landscaping shrubbery, septic systems, water pipes) – 15 years, Computers and peripherals – 5 years, Typewriters, adding machines, copiers – 5 years, Automobiles and trucks under 13,000 lbs. – 5 years, Office furniture (desks, chairs, file cabinets, etc.) – 7 years,
These Items can be depreciated much quicker and save hundreds or thousands on your taxes. Search the irs website for more info.
2. Johnny | June 24th, 2008 at 7:57 pm
I love your site. I’m thinking about buying a duplex in the coming months and this seems to be one of the best resources out there. As for tax deductions, what are the rules for applying a loss on your rental property as a tax deduction on your personal income?
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