Uncle Sam likes duplex properties, and rewards them with two sets of tax rules. The owner-occupied unit can be treated as a primary residence. The rental unit can be treated as investment property. You can depreciate and write-off related repairs and improvements for the rental unit.
How is living in a duplex?
You’ll get more privacy. Minus sharing a wall with your neighbor, you’ll have the privacy of a single-family home. Duplexes are generally more spacious than the average apartment, too, so you can enjoy your time at home without worrying that your upstairs, downstairs and next-door neighbors can hear your every step.
How much does it cost to buy a duplex?
I read a few books, including Larry Loftis’ Investing in Duplexes, Triplexes, and Quads: The Fastest and Safest Way to Real Estate Wealth, so I knew that small multifamilies had serious potential. I called up my agent, found a small bank repo duplex, and purchased it for $80,000.
Can you rent out one side of a duplex?
If you rent out both sides of it, it’s an investment property. But if you live in one side and rent out the other, it’s essentially two different properties when it comes to paying taxes on the sale. In other words, you would treat half of the duplex as a residential property and the other half as a rental.
Can a single family house be a duplex?
And if I’m going to help Chris, I want to help my BiggerPockets friends, too. One thing to keep in mind: This article focuses on duplexes, but you can use the exact same information to buy a single family house, a triplex, or a fourplex—so don’t limit yoursel.
When do you have to pay taxes on a duplex?
Your first $250,000 of gain, or $500,000 if you are married and file a joint return, is excluded from taxes if you lived in the duplex for at least two of the five years prior to the sale.
