One of the biggest gain from the rental property is by properly structuring your taxes... You seem to have some grasp of that. Rental income is not an active income. It is a passive income, even so it is taxed at your income tax rate. If there is a loss on your rental property, which most rental homes show because of the depreciation, you can actually deduct the loss from your income, if you meet the income eligibility, around 150k or less. It looks like you will not meet this requirement. This can be the place where the rental homes showing loss has the biggest taxable advantage. (I understand your question completely. I think others do not understand the tax portion of your question.) If you can create this situation of "passive loss", you can actually lessen your taxable income AND still have the mortgage deduction. It's a bit of double dipping, IMHO but this is how the tax code is written. I believe LLCs allow you to deduct the passive loss from your active income without the income eligibility. If you are interested, you should ask your tax attorney. Interest you pay on a mortgage for a non-primary residence is about 1 to 2% higher than a mortgage for your primary residence, if you did not know this already. You need to do the numbers and see if the difference between the tax on the income from the rental house versus the higher/lower interest payment on your principle residence will show advantage one way or the other. When you run out of depreciation on your rental home, you will see a huge jump in your taxable income from your rental. This really hurts... This is a good time to do a 1031 exchange to restart the depreciation clock. (look at your 1040 to see what you have for depreciation on your rental...) I do my taxes with multiple rental properties and I have played around with the numbers to see where there is best tax advantage. I pay the top tax rate. So any tax deduction is "huge" to me.... This is easy with Turbotax. Even so, you need to see a tax professional. I have no professional credentials in taxes. Good luck.

"It would be nice if some men would respond. Linda put her side of the problem on the forum (Posted 11-8-09), only women responded." Wrong. I am male and here is what I wrote to her then: "Posted by asolo (My Page) on Tue, Nov 10, 09 at 15:17 You had separate finances before. You have separate finances now. Nothing unusual about that. But there must be mutual understandings. I assume your presence and activities within Dan's house amount to something. Cleaning, housekeeping, errands, cooking perhaps? In that sense, what makes you a "tenant" -- one who pays rent -- as opposed to a "housekeeper" or "personal secretary"-- one who is entitled to a wage? I would encourage you not to open that pandora's box. However, if he does, I wouldn't hesitate to turn it around instantly. Spouses often share expenses but they do NOT pay "rent". Suggest you share all expenses (excluding taxes and insurance on Dan's home which remains his asset) but not "rent". I think "rent" within a marriage is an obnoxious term. As time goes on and you may buy furniture, etc,. you must be careful to record what's his, yours, and "ours". Your union can work just fine with separate accounts. Both of you should gain. Neither of you should have your assets depleted. "Rent" would be a net depletion for you because if you still lived in your own house, you wouldn't be paying it. I would resist that. If you contribute to repairs and/or upgrades to Dan's house over time, that becomes your equitable interest in the property, too, which you'll want to record. Overall, I think Dan's being kind of a jerk about this. He's creating more problems than he's solving. You may have married a pedant. If he persists, you may want to consider a "post-nuptial" agreement and put this nonsense to bed permanently. How's the marriage going otherwise?" Your questions from this post: "1.) I am asking Linda to share the living cost of the home we live in. 1/2 of the cost is $240.00 per month (includes taxes, insurance, utilities etc.). Is this right?" Yes and no. Your idea of "living expenses" is flawed. She should share in "expenses" such as utilities and food and cleaning products, other things you both consume. She should also be willing to contribute to occasional appliance repairs and other wear-and-tear items that both of you use and that will require repair or replacement in time. That part would be fair in my opinion. How much and whether or not that will represent equitable interest thereafter will be a can of worms for both of you, of course. She shouldn't contribute to any capital item. You remodel the place or replace the roof, you pay for all of it. She should not pay taxes or insurance or anything else related to the capital value of your separate asset. "2.) I am also asking Linda to share $160.00 per month of the profits she makes from her 10 rental units. Is this right?" No. Hers is hers. Yours is yours. You've already agreed to that. Your justification is nuts. She could say the same thing if you wanted to turn it around. She's agreed to dance to your tune and you want her to pay the piper, too. "3) I feel the request I am making for her to share is fair and honest. Am I right or wrong?" I don't doubt your honesty. Making requests is "fair" but I don't think an experienced disinterested outsider would back you up about the logic or "fairness" of your proposal. I suggest two things -- and both of you should share the cost: 1) Seek out an experienced family-practice lawyer, lay this on the table before them and ask their opinion/advice. Nail down the financial logic -- which may give both of you new perspectives. 2) Assuming you reach an agreement, I would then lock it down in a post-nuptial agreement. What the hell....the way you two are thinking, you're going to be talking to lawyers soon enough anyway if you can't clear this off the table. You could allow Linda to purchase 1/2 of your house. Maybe she could do her own financing or maybe you could carry the note. That wouldn't disrupt anything else for either of you and would remove the root cause of all this financial pedantry. If, in your opinion, those options can't be considered -- you will have told me more about yourself than you may have intended.

Hi Loralee, There are worthy realtors who'll be around soon, so I'll leave the agent questions to them. In the meanwhile, as an investments lender as well as an income real estate portfolio owner myself, I'll cover the top 3 questions; - Is it a good idea to incorporate a business for this activity to protect our personal assets in the event of any kind of tenant lawsuit? It depends. There are costs to create and maintain a corporation, and its prudent to weigh out & compare these costs versus alternative protective means. For a first-time investor (especially if your vulnerable net worth is still modest,) a good umbrella insurance policy will often suffice just fine. Insurance does also have its limitations though (including not addressing tax planning or cashflow management and defense...) so as you grow your vulnerable net worth, the incremental costs of a business entity (corporations, trusts, limited partnerships, and the like) begin making more and more sense. - If we subbed the management service to a professional management service, generally what kind of fee would we be looking at? For individual single family home rentals, management fees are generally; A) 1st month's rent from the new tenant, plus, B) 10% of the ongoing gross rental revenues. Usually this will get you the services of; Marketing & screening for new tenants, Collection, bookkeeping, and deposits to your account of monthly rents, Periodic maintenance inspections, Notification to you of physically viewable problems, late payments, defaults, Management of service providers for repairs, or cleaning/turnovers between tenants. (Of course, more or less may be offered in competitive environments.) - What kind of rental profit % should there be after mortgage, taxes, insurance, repairs. (I would like to know so I can compare current rentals in the area to see if we could offer comparable in order to know if this is feasible.) What kind of profit SHOULD there be??? Sweetheart, the answer is always; "AS MUCH AS YOU CAN POSSIBLY COLLECT!!!!" ;~) In reality, in most North American real estate markets, the rental revenue markets have not increased enough in the past 10-15 years to keep up with the crazy property appreciation prices that were driven by the easy credit available. The collapse of the credit markets has BEGUN to reverse this (with property flat to dropping, but rents beginning to awaken & grow again,) however its still going to take a while to really make sense on an easy basis. Most single family homes "bought at retail" cannot be fully supported by the local rental rates available, and most landlords of such homes need to accumulate a significant amount of equity in the home (or said inversely; need to reduce the loan balance to reduce the interest costs) enough so that the net real rental revenues are more than the out of pocket cash costs of ownership (i.e. "positive cashflows.") Prudent investors, however, donot consider a property TRULY cashflow positive unless its rental revenues are more than not just the interest paid for the loans... but ALSO the interest NOT EARNED (or lost) from the cash value of the equity that is trapped in the real estate itself (since, if that real estate were sold, the equity value could be earning interest elsewhere... and thus is a real cost, albeit merely 'on the books.') GENERALLY SPEAKING; anytime you can acquire a rental property in a market where the rents are climbing, and you can hope to have real rental revenues grow to be more than your total real costs of ownerhip (including equity value opportunity loss) within 2-3 years... you are doing very well. Hope this is helpful. Dave Donhoff Leverage Planner

Thanks for the well wishes you two. This particular daughter felt it in her best interest to break her lease and move out of that apt complex. She couldn't take it anymore. She paid the rent through the end of her lease and was content to live in a cardboard box if need be to be rid of the living conditions. Her physician was convinced she had contracted one of the hepatitis viruses from the filth at the apt complex as she needed several ER visits and subsequent hospital admissions.. Turned out she did not have hepatitis thankfully, but had to have her apendix removed. It was a rip roaring year for sure. She moved to another apt building a few months ago costing an extra $400/mo where it's not The Ritz by any stretch, but it seems to be a bit better from what I can tell from Skype video calls. This complex has a locked gate which seems to keep the 'problems' on the other side of the gate. Right outside the gate, but at least not loitering/fighting, living in the bushes, the hallways, laundry room or stairs of the complex proper. She is visibly relieved. Thus, I am as well. She's pleased with the on-site laundry machines at her new to her building. She has a laundry room on her floor. A Speed Queen set she says has no odor to it. (but her sense of smell is poor, so I hope...) She sees steam coming out of this washer which is a relief as she only does hot washes after the two years from hell at the other complex. She adds Borax and LemiShine powder laundry booster to each load as a little insurance and she feels that her Mexican Ariel covers any other 'cooties' that might be lurking in the otherwise odor-less washing machine she uses. Clorox liquid is also in her cabinet and she runs a bleach only wash before she puts her laundry in if she suspects any monkey business has been going on. She's overseas at the moment as a tutor for her university so is washing her clothes in sinks and hang drying. Lamenting the lack of ice and cold beverages in Europe (I warned her) during the heat wave. I got her a package of the Amazon brand laundry sheets type of detergent to make the many airport and train trips easier. She misses her Mex Ariel, but for 6 weeks, these laundry detergent sheets will do the job. She'll be in several countries during her stay, so the detergent sheets are carry-on bag friendlier. Mama, I offered to buy her a portable washer to smuggle into her apt. She gave it serious consideration, but since she just went through landlord after landlord not wanting to rent to her due to her age, she doesn't want to risk anything that would cause her to lose her current improved crummy apt. It was many rental rejections and she just wants to have a habitable slot in a wall to live in at this point. However, when she moves up in the world, she will never use a communal washing machine ever again--she's told me this I don't how many times. Anyhow, when she returns to the states, she'll fly to the airport in the next city here and stay here for a few days, maybe a week. Rest, eat, get her EU laundry thoroughly washed here at home, then back to Uni. The final year. Not a moment too soon. She's ready to shake the filth of her college town off her feet for good. No love lost there. I don't think she'll ever look back. Or go back. Or refer to it by it's proper name even. Hope you all are doing well! <3