Reply to Is renting a place out worth it considering the Depreciation Recapture Tax?

Forum Index » Real Estate

Reply to "Is renting a place out worth it considering the Depreciation Recapture Tax? "

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous]In my experience, it was worth it.

In 2012, I sold my house which I partially rented out (rented 2 BRs to roommates, I lived in the 3rd BR).  So tax wise, I had a partial rental, deducted partial expenses, etc.  I owned the house from 2001-2012.

One of the PPs is correct that you have to take the depreciation recapture (or whatever it's called) when you sell even if you didn't take depreciation in prior years, so you might as well take depreciation from day 1.  I worked with a CPA when I first got the house to make sure I was doing it right, and from then on, I could do my taxes on Turbo Tax (with some notes I made for myself and looked at each year).  I also consulted with the CPA just before I sold and again after I sold when I did my 2012 taxes.  Those consults were invaluable, and I highly recommend you check with a CPA to run some numbers before you consider renting out a property.

My numbers were:
I was in the house 11 years.
The whole time I had a mortgage of about $2000 monthly and I took in about $1400-$1500 monthly in rental income.   
I believe the depreciation amount I could deduct each year was around $5000, or in that neighborhood.
Because I put significant improvements into the home each year, I usually had a "loss" on paper vs. the rental income, and each year, I got nice refunds (around 3-5K).

Original purchase price was $276K.  Sold price in 2012 was $515K.

When all was said and done on my 2012 taxes, I only owed about $5K for state and federal combined.  Given all the depreciation I took and the gains from the sale, I think that was a pretty good deal.  One other thing that was very helpful was when I met with the CPA just before I sold, she gave me a conservative estimate for how much I should keep from the sale to hold back for taxes.  She actually overestimated that amount, so instead of 20K, it was around 5K.    [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics