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I am just completing the purchase of a two-family house, and I am trying to understand the tax implications so I can plan a little for next year.

It appears to me that the common strategy is to write off a whole slew of expenses against the rental income, essentially negating it if possible.

How is mortgage interest attributed to rental unit (1st floor) vs my unit (2nd and 3rd floors)? Is mortgage principal payment also an expense to be written off against rental income?

Also, is it generally wise to write off a portion of the value of the property as depreciation, or does this somehow impact your capital gains when you sell?

I have a load of questions, so a good reference book or site on the WWW would also be appreciated.



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