I've come to understand that owning a townhome/duplex and living in it while others are also renting from you isn't as sexy as it may seem at first glance. Over and over again I get this from friends I trust.

However, I'm spending $400+ on renting from someone else every month anyway. Say I would net-loss $50 on a property that I would both rent to others and live in. Then why don't I just purchase the rental property, and save $350 a month by not paying rent to someone else and building equity at the same time? This is the situation I have computed after talking with others who own, live in, and rent out the same property.

The only idea I have is that the down payment for the property could have been better spent on another type of investment that would make more money long term.

Can someone enlighten me?

  • 6
    This is what is generally referred to as "buying a house". What exactly is that you're asking here? – littleadv Feb 23 '15 at 8:36
  • Prior to the whole real estate boom / bust, I've always seen buying my own home as a method for enforced savings. Sure, you have to pay someone for the privilege. But you can't really renege on it as easily as just saying to yourself "I'll pay my rent AND put away some more for savings.". Buying a house kills two birds with one stone --- sort of. – Peter K. Feb 23 '15 at 13:32
  • Why is this question downvoted? I did my best to word it correctly, and although it may seem obvious to seem, wasn't obvious to me. – freedomflyer Dec 5 '17 at 18:47

If it is a separate unit from the rest of the property, you can use that portion as an investment property. the part, or unit, you are living in is your primary residence. The remainder is your investment. You are eligible to not pay capital gains on the portion you live in After two years. As always consult a tax accountant For advice... Also, if this is less then 4 unit, you may he able to finance the sale of the home with an FHA loan.


When you live in your own rental property, it no longer counts as your 'rental property'. It becomes your own living property and legally you cannot get tax benefits.

  • 6
    Not true, depending on the jurisdiction. In the US, for example, mortgage interest and property taxes for personal residence are deductible from other income while for rentals - only from rental income. – littleadv Feb 23 '15 at 8:45

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