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March 15, 2007
Building Manager
I recently purchased a 3 apartment house and am renting two apartments and sharing one. It works out great, but my roommate is a former contractor and much better at the fixing, maintenance stuff. Would it be kosher to allow him to live for free if he manages the property? How would I declare that for tax purposes?
Comments
It may make more sense for you to pay him, and still charge him rent. Then the payments are more easily tax deductible. You would have to declare that rent he pays as income, however, and pay taxes on that, so don't know if you'd come out ahead.
One annoying thing about being a landlord/homeowner is that your own sweat equity isn't tax-deductible, but paying others is. For example, if you hire a painter to repaint a tenant apartment, it is all deductible from the rental income. If you spend many days painting it yourself, only the cost of the paint and brushes is an expense. It doesn't seem quite fair.
Posted by: Anonymous at March 15, 2007 12:16 PM
unless you anticipate lots of work needing to be done I would just pay him on an as needed basis.
Even if his share of the rent is only $500/month you probably won't spend that kind of money on repairs for a small property like this. If the property is in decent shape then many months may go by without any issues. Then something may come up that would cost a few hundred to get a handyman to fix.
If a big project needs to be done then you would have to negotiate with your roommate anyway.
Posted by: Anonymous at March 15, 2007 12:25 PM
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