FAQ: How Do I Model a Rental Property I Personally Use?

If you have a property that is partially a rental and part a principal residence you will want to split it's value and expenses on the platform. This will take place in three discovery sections: expenses, assets and debts.

All sections will involve understanding what percentage of the home is used for personal use and what is used for rental.

Assets

In the Asset section you will split the value of the property between the 'Home' and 'Rental' fields. For example, if 40% of a $500,000 home is rented you would enter:

• Estimate of Home Value: $300,000
• Estimate of Rental Value: $200,000

This will ensure that tax is applied to the Rental portion when you sell, but not the Home portion.

Expenses

In Rental Expenses only include the portion that is deductible against the Rental Income.

In Personal Expenses add the personal portion of rental expenses in a separate category like Miscellaneous spending (or if you have another category empty, like condo fees, use that).

When you want to sell the rental property at a specific date you can reduce the expenses in two ways. One way is to add a Discovery > Expenses snapshot starting the year/age the rental is sold and remove the expenses from that period and onward. The second way is to override the expenses in Planning > Projections > Table. The downside is that it’s easy to lose track of these overrides, so option one is better.

Debt

If you have a mortgage on your property, you'll want to split it in the same way you did for the Assets Section.

Create one mortgage that is a Home mortgage and one that is a Rental mortgage. This will ensure that some of the mortgage interest you pay is tax deductible.

Make sure to link any debt to the home asset. This will ensure these debts are paid off when your home is sold. Since it is one home, it is not necessary to link one to home and one to rental. They can both be linked to your home.