Renting a room in the Phoenix Metro (Tax question) (real estate, rental)

[acrylic]

I've searched high and low for this answer, but I recently bought a house and one of my friends will be moving in. How much (percentage-wise) should I set aside for tax purposes?

Thanks in advance!

[jmw51882]

You need to provide more information for anyone to answer this question. Besides, it isn't a Phoenix area question. You'd get better exposure in the a real estate group.

Did you purchase the house to be a rental? Will you be living there? What condition is the house in? Will it need any significant repairs in the next year? These will all affect the answer. Unless it is a very unique situation, you are likely to show a loss on paper because of the building depreciation. As a general rule, rental property is for cash flow to the landlord. It rarely shows a profit. Don't get worried, this is not a bad thing.

The easy answer is whatever % tax bracket you're in now.

[acrylic]

Thanks for that answer. I just thought of posting it here because perhaps someone in the area had experience with this exact scenario.

I purchased the house to live in it and I will be living there. The house is in great condition after I did lots of work to it prior to moving in. I will be doing some more repairs as soon as I've got the money, but it's all cosmetic. Everything functions perfectly in the house.

Perhaps I'll post this in another section of the site, but I figured it was worth a shot here.

[jmw51882]

Unless it is a duplex and you have registered it as a rental property, claiming rent income or loss on your taxes will be a red flag for audit, both with the IRS and AZ. Because you said this was a friend of yours, I would recommend just having a roommate situation and not having anything affect your taxes. You are just living with someone and sharing expenses. Have the friend pay the utilities and you pay the mortgage for example.