I am also neither an attorney nor a tax advisor.

Yes, the rent money you pay to your friend is taxable income, but suddenly all kinds of expenses around the house - including a fraction of the interest paid on the mortgage - become tax deductible.

For example, let's say that the mortgage is $1000 / month and you pay your friend $500 / month.

If you live in 50% of the house, then he can deduct 50% (plus or minus) of the expenses associated with owning the house, including:

• Interest on the mortgage (but never the principal)
• The insurance and taxes on the property
• Repairs
• Upgrades (stretched out via depreciation rules)
• Depreciation on the building itself (1/27.5 of the value of the building every year)

All of these things (50% of them, anyway) become tax deductible. It'd be quite possible for him to take a loss on the endeavor and actually reduce his taxes every year.

Until it comes time to sell; selling a property that has been used as a rental is more taxable than selling a property that has been a personal residence.

I am also neither an attorney nor a tax advisor.

Yes, the rent money you pay to your friend is taxable income, but suddenly all kinds of expenses around the house - including a fraction of the interest paid on the mortgage - become tax deductible.

For example, let's say that the mortgage is $1000 / month and you pay your friend $500 / month.

If you live in 50% of the house, then he can deduct 50% (plus or minus) of the expenses associated with owning the house, including:

• Interest on the mortgage (but never the principal)
• The insurance and taxes on the property
• Repairs
• Upgrades (stretched out via depreciation rules)
• Depreciation on the building itself (1/27.5 of the value of the building every year)

All of these things (50% of them, anyway) become tax deductible. It'd be quite possible for him to take a loss on the endeavor and actually reduce his taxes every year.

Until it comes time to sell; selling a property that has been used as a rental is more taxable than selling a property that has been a personal residence.

I am also neither an attorney nor a tax advisor.

Yes, the rent money you pay to your friend is taxable income, but suddenly all kinds of expenses around the house - including a fraction of the interest paid on the mortgage - become tax deductible.

For example, let's say that the mortgage is $1000 / month and you pay your friend $500 / month.

If you live in 50% of the house, then he can 50% (plus or minus) of the expenses associated with owning the house, including:

• Interest on the mortgage (but never the principal)
• The insurance and taxes on the property
• Repairs
• Upgrades (stretched out via depreciation rules)
• Depreciation on the building itself (1/27.5 of the value of the building every year)

All of these things (50% of them, anyway) become tax deductible. It'd be quite possible for him to take a loss on the endeavor and actually reduce his taxes every year.

Until it comes time to sell; selling a property that has been used as a rental is more taxable than selling a property that has been a personal residence.

I am also neither an attorney nor a tax advisor.

Yes, the rent money you pay to your friend is taxable income, but suddenly all kinds of expenses around the house - including a fraction of the interest paid on the mortgage - become tax deductible.

For example, let's say that the mortgage is $1000 / month and you pay your friend $500 / month.

If you live in 50% of the house, then he can deduct 50% (plus or minus) of the expenses associated with owning the house, including:

• Interest on the mortgage (but never the principal)
• The insurance and taxes on the property
• Repairs
• Upgrades (stretched out via depreciation rules)
• Depreciation on the building itself (1/27.5 of the value of the building every year)

All of these things (50% of them, anyway) become tax deductible. It'd be quite possible for him to take a loss on the endeavor and actually reduce his taxes every year.

Until it comes time to sell; selling a property that has been used as a rental is more taxable than selling a property that has been a personal residence.