Answers
I used to live in this house but now it's a rental, I currently have a $32,000 line of credit at an adjustable rate, can I refi and get a good fixed rate or would I pay more because it's a rental now?
You were supposed to change it when you moved. Yes, you can get a fixed rate, but fixed rates on income property is higher then owner occupied.
Getting a home equity loan on a house that will be rented out involves having at least 20 percent equity in the home, examining a credit report ...
if it is used for personal reasons?
Tax laws differ from country to country and maybe state to state but I think in general:
Interest paid on money borrowed for investment purchases is tax deductable.
The home equity line of credit was develped for this purpose. You don't pay interest unless you withdraw the money, and if it is withdrawn for a downpayment on a rental property that classifies as money borrowed for investment purposes. Same as borrowing money to buy an RRSP. The interest on that loan is tax deductable.
That is the way it is in Canada.
My primary residence's mortgage is all paid off. I applied HELC against it and use the money to buy an income property. Can I deduct the HELC' interest as investment interest for my rental property?? Any tax expert can give me some help, thanks.
You are saying that you took out a HELOC against your primary residence, right?
HELOC interest is tax deductable. It's one of the reasons that they are so wonderful. It wouldn't be deducted as "investment interest", whatever that is, it would simply be interest paid on a mortgage.
I am involved in a 3-way investment on a rental property and we are being forced to sell because of a DOT project. Our profit on this property will be approximately $75,000 and we need to figure out how to split this up. Being close family members, we weren't too concerned about figuring this out we bought the property.
I would really appreciate any suggestions from real estate investors experienced with partnership investments like this.
Here are the figures for the capital and work/mangement invested by each party.
Investor #1:
Invested $150, 000 by taking out a regular home loan.
Lived at the property and payed "rent".
Did 85% of the maintenance, improvements and rental property management.
Investor #2:
Invested $75,000 from a home equity line of credit.
Did 0% of the maintenance, improvements and rental property management.
Investor #3:
Invested $25,000 from a home equity line of credit.
Did 15% of the maintenance, improvements and rental property management.
Thank you!
Since Investor #1 paid rent and primarily maintained the home, it would be split like this
$250,000 purchase price; profit is 75,000 (I assume you have already taken the maintenance out of this)
Investor #1 paid $150,000 / $250,000 = 60% of $75,000 profit = $45000
Investor #2 - paid $75,000 / $250,000 = 30% of $75,000 = $22500
Investor #3 - paid $25,000 / $250,000 = 10% of $75,000 = $7500
If you haven't taken out the maintenance, then you need to deduct the cost of maintenance out of the profit and pay each of the parties back for the maintenance they paid. Keep in mind that investor #1, as a renter, would normally have had to maintain the property but I'm assuming that he did more than just "maintain" the property.
I have about $20,000 worth of equity in my rental property and I would like to pay off approx $15,000 of lingering dept so I can just have no outgoing bills and just pay the house payment that the tennants are paying already and no bills. I am confused at what would be the best way for me to go either refinance or home equity loan or a home equity line of credit?
My credit score is about 650. thank you for the help
Don't take unsecured debt that you have now and secure it with your house. Understand that taking out a home equity loan or refinancing is not "paying off" your $15K worth of debt, it is TRANSFERRING it. With the housing market being how it is at the moment, don't put that debt on your house. You may find yourself upside down in the mortgage in a year if you do. Just keep working on the debt and get it paid off.
Search Tax Information » Investment Property - Leveraging Rental ...
Owning investment property is a tremendous wealth building strategy. Thousands upon thousands of individuals have amassed great wealth by investing in rental properties.
Unfortunately, few investment property owners learn how to leverage equity in a way that maximizes tax deductions while creating and locking in equity gains. Instead, they leave themselves open to price fluctuations in the residential property market. These fluctuations can wipe out or severely reduce equity positions in property.
Housing Boom To End?
There is little doubt we are coming to the end of a huge boom market in residential properties. For the last four years, properties have appreciated at unheard of rates. The question, of course, is what happens when the market cools off? Will we simply see a price plateau or an actual drop in prices? While nobody is sure, the clear consensus is property owners should move to preserve equity while they can.
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