Possible to rent home "under the table"?

[Anonymous]

We are temporarily relocating for my job--housing will be provided for us there--but we plan on coming back to our house in a year so just need someone to cover the mortgage while we're gone. Is it still an "income" property if we aren't actually profiting from the rental? Is there any way to avoid a higher tax rate? The home will remain our primary address and we will continue to pay DC taxes. Thanks.

[Anonymous]

Your mortgage holder may not approve.

Our neighbor tried to rent out his house and the mortgage company said no. He ended up selling.

[Anonymous]

I don't know the answer to this but wanted to add that "primary address" by definition means where you are on a map, so no, it will not be your primary address for a year. To the taxes point, everyone who owns a home pays its property taxes, though I think you may mean income but I don't think that matters.

I'd guess the only way to not have it count as income is to charge an amount that won't earn your any extra money (i.e. your mortgage payment + taxes + insurance).

[Anonymous]

What does your mortgage company have to do with renting your house? It's your house, not a condo.

The rent is definitely considered income, however, you can deduct a ton of stuff like management fees, repairs, anything. We did it for 3 years when we moved. It wasn't bad on our taxes. It actually helped a little b/c we wrote off so much stuff.

We definitely used a management company though. It helped significantly.

[Anonymous]

Anonymous wrote:Your mortgage holder may not approve.

Our neighbor tried to rent out his house and the mortgage company said no. He ended up selling.

If this happened, something else was going on like a foreclosure or short sale situation.

[Anonymous]

Anonymous wrote:What does your mortgage company have to do with renting your house? It's your house, not a condo.

The rent is definitely considered income, however, you can deduct a ton of stuff like management fees, repairs, anything. We did it for 3 years when we moved. It wasn't bad on our taxes. It actually helped a little b/c we wrote off so much stuff.

We definitely used a management company though. It helped significantly.

Don't cheat on your taxes. Do it above board and after depreciation and other deductions you'll probably come out ahead.

[Anonymous]

I've been renting out my condo for the last seven years. My mortgage hasn't changed. I don't think they care.

[Anonymous]

Anonymous wrote:

Anonymous wrote:What does your mortgage company have to do with renting your house? It's your house, not a condo.

The rent is definitely considered income, however, you can deduct a ton of stuff like management fees, repairs, anything. We did it for 3 years when we moved. It wasn't bad on our taxes. It actually helped a little b/c we wrote off so much stuff.

We definitely used a management company though. It helped significantly.

Don't cheat on your taxes. Do it above board and after depreciation and other deductions you'll probably come out ahead.

This.

-mortgage lender

[Anonymous]

Anonymous wrote:Your mortgage holder may not approve.

Our neighbor tried to rent out his house and the mortgage company said no. He ended up selling.

The mortage holder won't know, and won't ask unless you're behind on payments. As long as they get paid every month, they really don't care.

[Anonymous]

Anonymous wrote:

Anonymous wrote:What does your mortgage company have to do with renting your house? It's your house, not a condo.

The rent is definitely considered income, however, you can deduct a ton of stuff like management fees, repairs, anything. We did it for 3 years when we moved. It wasn't bad on our taxes. It actually helped a little b/c we wrote off so much stuff.

We definitely used a management company though. It helped significantly.

Don't cheat on your taxes. Do it above board and after depreciation and other deductions you'll probably come out ahead.

+1

If you claim you are building a house to accommodate a needy relative, yet rent the place out for years (to paying renters, sans "needy relative"), expect the neighbors to make some phone calls. And they will.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What does your mortgage company have to do with renting your house? It's your house, not a condo.

The rent is definitely considered income, however, you can deduct a ton of stuff like management fees, repairs, anything. We did it for 3 years when we moved. It wasn't bad on our taxes. It actually helped a little b/c we wrote off so much stuff.

We definitely used a management company though. It helped significantly.

Don't cheat on your taxes. Do it above board and after depreciation and other deductions you'll probably come out ahead.

This.

-mortgage lender

When I inherited a house, I had to get a rental mortgage since someone was still living in it and paying rent. I come out way, way, way, WAY ahead after depreciation, deducting taxes, mortgage, all expenses even after declaring rental income.

[Anonymous]

Let me translate "under the table" - you are asking if you can break a contract and/or law and get away with it. Chances are you can, but don't try to pretty it up, ok?

[Anonymous]

Anonymous wrote:Let me translate "under the table" - you are asking if you can break a contract and/or law and get away with it. Chances are you can, but don't try to pretty it up, ok?

Mortgage lender here. Getting an owner occupied mortgage does not tie you to live in that house for 30 years nor does it require you to refinance if you have to move out. It's all about intent and whether you moved in after closing/whether you knowingly falsified intent to occupy.

[Anonymous]

Anonymous wrote:Your mortgage holder may not approve.

Our neighbor tried to rent out his house and the mortgage company said no. He ended up selling.

Your mortgage company will not know that your house is rented out, so whatever was going on with this neighbor goes much deeper than what OP is talking about. Could be that there is an HOA involved here, specifically condo. The HOA can prevent an owner from renting out a property. We own a home that is now a rental but used to be our primary residence. When we turned it into a rental 15 years ago we did not tell our mortgage company. Not because we were trying to hide anything but because it was immaterial. We did however tell our home owners insurance company. If you rent out your home, or change the usage of that home in any way such as running a business out of it that will require you to have commercial traffic in and out of the house you will need to change the type of policy you have on the house. That is critical that you do this.

In terms of "under the table" - if you are living in another state and do not show that the house is being rented the IRS might wonder how in the world you are able to keep two households with your current income, without renting out one of the homes. But the IRS would have to have a reason to look. They have bigger fish to fry.

Also, your residence is based on where you earn your income. You can't just decide that you want to legally keep your residence in the state you used to live in just because you still have a home there.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What does your mortgage company have to do with renting your house? It's your house, not a condo.

The rent is definitely considered income, however, you can deduct a ton of stuff like management fees, repairs, anything. We did it for 3 years when we moved. It wasn't bad on our taxes. It actually helped a little b/c we wrote off so much stuff.

We definitely used a management company though. It helped significantly.

Don't cheat on your taxes. Do it above board and after depreciation and other deductions you'll probably come out ahead.

This.

-mortgage lender

When I inherited a house, I had to get a rental mortgage since someone was still living in it and paying rent. I come out way, way, way, WAY ahead after depreciation, deducting taxes, mortgage, all expenses even after declaring rental income.

You have to make a relat Felt low income to deduct anything above rental income on your taxes. It used to be $100k unless you were in the real estate business. Most people in this area are wel above that.