We are contemplating purchasing a duplex in a HCOL area. Our 65% cash down, youngster (YA) 5% cash down and YA will take a mortgage for the remaining 30%. Numbers are approximate; our cash down will make it possible for YA to buy into a small home as SFH are unaffordable. The unit in question is a duplex, but we could consider a triplex with similar arrangement (the math would be a lot easier!). YA has some cash and an excellent job.
NOT INTERESTED in any discussion about mixing family with business, or supporting the next generation, or how we should save our money and eat gruel. Assume we can well afford this, retain a ~65% ownership stake to protect our interest, and will have a contract to cover expense sharing and eventual exit sale or buyout. Everyone has excellent credit, no drug problems, and we all vote the same way![:D]( "Very Happy")
So my questions are... The property ownership would be roughly 65/35, but use is 50/50. YA will occupy her unit, pay the mortgage and deduct that interest. We will rent out the other unit. How should we split deductions or expenses? As new landlords, can we depreciate 50% or 65% of the building? Can we deduct 50% or 65% of the purchase costs, or do they get added to our cost basis? What about insurance or property taxes? When we sell YA will not pay taxes on her share (owner occupied <250K gain) but we will owe LTCG. If YA inherits, the 65% is stepped up and she still gets $250K exclusion of gain on her 35%. I think we are in the clear on repairs to the rented half, or small improvements to the exterior, but I really want to be on the good side of the IRS.
And yes, we will consult with a CPA but I really want some thoughts/input. Anything we can arrange to benefit the family should be done.
NOT INTERESTED in any discussion about mixing family with business, or supporting the next generation, or how we should save our money and eat gruel. Assume we can well afford this, retain a ~65% ownership stake to protect our interest, and will have a contract to cover expense sharing and eventual exit sale or buyout. Everyone has excellent credit, no drug problems, and we all vote the same way
So my questions are... The property ownership would be roughly 65/35, but use is 50/50. YA will occupy her unit, pay the mortgage and deduct that interest. We will rent out the other unit. How should we split deductions or expenses? As new landlords, can we depreciate 50% or 65% of the building? Can we deduct 50% or 65% of the purchase costs, or do they get added to our cost basis? What about insurance or property taxes? When we sell YA will not pay taxes on her share (owner occupied <250K gain) but we will owe LTCG. If YA inherits, the 65% is stepped up and she still gets $250K exclusion of gain on her 35%. I think we are in the clear on repairs to the rented half, or small improvements to the exterior, but I really want to be on the good side of the IRS.
And yes, we will consult with a CPA but I really want some thoughts/input. Anything we can arrange to benefit the family should be done.
Statistics: Posted by CAsage — Sun Jun 23, 2024 7:43 pm — Replies 4 — Views 261