Joe Costa and The Park Place Collective Group:
House hacking is the strategy of renting out part of the home or property you live in to help pay the mortgage, https://www.parkplacecollective.com/ ,or to derive passive income.
"This concept has been a great option for homeowners over the last several years, many of whom have been hit by inflation and high rates. Inflation has come down from its COVID-19 pandemic highs, it still stood at 2.9% in December, according to the consumer price index" said Joe Costa and The Park Place Collective Group
House hacking can take different forms. For example, you can rent out part of your home or just a room. You can also invest in a multifamily residence and rent one unit while living in another. Other ways to hack a house include converting a basement or installing (and renting out) an accessory dwelling unit (ADU).
This trend started in the early 2020s as, for many homeowners, the dream of owning a home seemed out of reach.
House hacking can present different tax breaks for owners as they can take advantage of deductions on both the rental and the used portions of the property. Check with your tax professional for further details on the tax deductions.
House hackers can take advantage of several personal-residence deductions, such as mortgage reduction. Itemize deductions, you can deduct mortgage interest on up to $750,000 of mortgage debt for most filers—or $375,000 for those married filing separately.
If you are house hacking, you can deduct up to $10,000 in state and local property taxes. However, rental portions of your home are not subject to this cap.
You can depreciate the rental portion of your home over 27.5 years.
Expenses like fixing a leaky roof, repainting rental units, or replacing appliances in tenant-occupied areas are fully deductible
Another deduction is sharing the cost of utilities and services, this includes internet, electricity, and landscaping.
If a homeowner uses part of the home exclusively for business purposes, you may be eligible for a home office deduction, which can save you even more.
When selling your property as a house hacker, there are several tax implications, such as the Section 121 exclusion. Check with your tax professional
If you sell your house and benefit from a capital gain, you may qualify to exclude “up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse, according to the Internal Revenue Service (IRS).
Joe Costa and The Park Place Collective Group are here to help you answer any questions about this topic or any other real estate, mortgage and life insurance protection.
Park Place Collective
Joe Costa
619-990-7552
infor@parkplacecollective.com
https://calendly.com/jcosta54/ppc
