Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 1
(Also posted to the Real Estate Investing & Buying/selling a home boards)

Life in my new house is going well so far, but there's a new wrinkle I'm going to throw into things. I'm going to let out a room to a friend. He's trying to save cash to get his own place, and the rent at his apartment doesn't exactly help him out. I have loads of space, we get along well, and I'm happy to help him out.

Now, the question - should I report this as rental income? Or, more specifically, if I report it or not, what about the following:

1) What impact does this have on my mortgage? I know there's a distinction between primary-residence and investment-property; is there any negative side effect of blurring the line, ie "whoops, my note's due now" or "whoops, my rate just jumped .75%?

2) What is the impact of selling the home in the future? Again, I'll be living there, but it would also be a rental property.

3) What is the impact of this on investing in real estate in the future? I've read that unless you have previous landlord experience, you might have trouble getting a rental-property mortgage, since they won't allow you to show theoretical rental income when you apply. Would having a year's worth of documented rental income help later on?

4) What is the impact of this on deducting mortgage interest come tax season?

5) What is the impact of this on deducting home maintenance come tax season? I believe you can deduct a number of things on a rental property, again, the line seems blurred, since I'll still be living there.
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.