Investment property rent paying mortgage on second investment property?
Question by josegg : Investment property rent paying mortgage on second investment property?
My parents are planning on buying an investment property. They plan on paying cash for this property. So they will not have a mortgage. I will be renting the place from them with 2 other people. If they decide to finance a second property, would they be able to use the rent from both properties to pay the mortgage on the second property?
How and what will they be taxed on?
How does rent to own work when it comes to taxes?
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yes,
net profit
never heard of it….it might not be legal.
The mortgage lender will look at their income in its entirety to determine whether they can get the loan for the second property, along with all the costs and income they have. Paying cash for the first property will be a good thing wrt this.
Their taxes will be look at the rental property as a separate business for them. Therefore the IRS will look at their income from the rentals and their costs, which include mortgage interest, insurance etc.