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Old 11-03-2014, 11:47 AM
 
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Hi, I am renting my condo situated in South bay area south of San francisco metro area.
aside from renting, tax in the income on the rent is not clear. What form do I use?
How uncle sam knowns i am renting? For salary income, my employer send the info directly to IRS.

Another question is rent controlled apartments which I heard a lot in sfo area. I believe those are something related to that your rent can no go above certain rate.
If I raise my rate how much can I raise per yearly? Thanks!
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Old 11-03-2014, 12:02 PM
 
Location: Portland, Oregon
10,987 posts, read 20,492,394 times
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First you need to review your condo documents to determine what it says about renting units. Some limit the % because it impacts lender standards on mortgages. Some will require a background check. Many charge move-in/move-out fees Know your rights and responsibilities. Keep in mind the fact that your HOA may assess fees if the renter violates some rule, you need to make reference to that, and what you will do about that, in any lease.

I doubt that your condo complex is subject to rent control, that is a San Francisco thing and doesn't apply to condos in any case.

You can ask for whatever rent you want. Be sure to cover not just your mortgage, property taxes and HOAs but money for property damage. Study the landlord laws in your community regarding deposits, cleaning fees and the like.

I have no idea how IRS would find out that you have rental income but if they do they will assume that all that income is taxable and force you to prove expenses as well as assess penalties & interest. Here is a link to IRS on that subject: Tax Topics - Topic 414 Rental Income and Expenses
Publication 527 (2013), Residential Rental Property
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Old 11-03-2014, 02:49 PM
 
4,538 posts, read 6,419,982 times
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Quote:
Originally Posted by Nell Plotts View Post
First you need to review your condo documents to determine what it says about renting units. Some limit the % because it impacts lender standards on mortgages. Some will require a background check. Many charge move-in/move-out fees Know your rights and responsibilities. Keep in mind the fact that your HOA may assess fees if the renter violates some rule, you need to make reference to that, and what you will do about that, in any lease.

I doubt that your condo complex is subject to rent control, that is a San Francisco thing and doesn't apply to condos in any case.

You can ask for whatever rent you want. Be sure to cover not just your mortgage, property taxes and HOAs but money for property damage. Study the landlord laws in your community regarding deposits, cleaning fees and the like.

I have no idea how IRS would find out that you have rental income but if they do they will assume that all that income is taxable and force you to prove expenses as well as assess penalties & interest. Here is a link to IRS on that subject: Tax Topics - Topic 414 Rental Income and Expenses
Publication 527 (2013), Residential Rental Property

once you add in depreciation, taxes, inssurance, advertising costs, mortgage and wear and tear and fees most likely you will break even or have a loss on paper. Only the amount above that is taxable.
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Old 11-03-2014, 05:08 PM
 
Location: Portland, Oregon
10,987 posts, read 20,492,394 times
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Rents in the OP's area are unreal... unless he purchased in the last 3 years he may be in the money. Of course the OP needs to find other housing, ideally in another market.
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Old 11-04-2014, 06:33 AM
 
4,538 posts, read 6,419,982 times
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Quote:
Originally Posted by Nell Plotts View Post
Rents in the OP's area are unreal... unless he purchased in the last 3 years he may be in the money. Of course the OP needs to find other housing, ideally in another market.
But he has the Depreciation. I have no mortgage on my condo and very low property taxes.I have to have it rented 365 days a year at 3k or higher and have nothing break to show a profit on "paper"
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Old 11-05-2014, 02:23 AM
 
Location: Silicon Valley
18,813 posts, read 32,336,193 times
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San Francisco has different rent laws than much of the state, so you should start here:

San Francisco Rent Board : Landlord & Tenant Information

As far as your taxes, you would have a lot of tax write-offs. If you claim any write-offs from your new home, and don't claim any profit or loss from the sale of your last home, it seems to me you'd be likely to get audited by the IRS which will wonder what's going on with the old house. They may never catch you, but I wouldn't chance it. Here are some links to tax write-offs for landlords:

Top Ten Tax Deductions for Landlords | Nolo.com

Tax Topics - Topic 500 Itemized Deductions
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Old 11-05-2014, 06:40 AM
 
4,538 posts, read 6,419,982 times
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BTW there is generally NO WRITE OFF on renting off your condo if you are in AMT. The write-offs do carry forward to a future pointin time when you are not in AMT and you can take them at that point.
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Old 11-05-2014, 09:55 AM
 
Location: Silicon Valley
18,813 posts, read 32,336,193 times
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Quote:
Originally Posted by SandyJet View Post
BTW there is generally NO WRITE OFF on renting off your condo if you are in AMT. The write-offs do carry forward to a future pointin time when you are not in AMT and you can take them at that point.
What is AMT?

American Monumental Tax? Sorry, need more coffee...
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Old 11-05-2014, 10:21 AM
 
4,538 posts, read 6,419,982 times
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Quote:
Originally Posted by NoMoreSnowForMe View Post
What is AMT?

American Monumental Tax? Sorry, need more coffee...
Alternative Minimun Income Tax which phases out certain deductions once your income reaches a certain level. Deductions such as losses on investment property, real estate taxes, deductions for wife and kids, deductions for state and local income taxes start to get phased out.

In AMT my condo which shows a loss I cant deduct loss. I can save up the losses for a point in time when I am not in AMT and then take them.

Getting married and having kids and paying state tax and property tax are all triggers for AMT. Best way to avoid it dont get married or have kids or pay state or property tax and earn a low income.
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Old 11-06-2014, 11:39 AM
 
926 posts, read 973,152 times
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thanks guys, researched little bit about it. the time and effort in sorting out the tax and its complications far outweight the few hundreds bucks I make on renting therefore it seems beneficial not rent or just have the tenant stay free.
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