03-10-2011, 02:16 PM
You also want to look into your tax rates. I never owned a property here as a non-resident, but I understand it's more expensive.
As a rental, your property is taxed on the commercial rate per square foot, not the residential rate.
Also, you are required to depreciate the rental by the IRS, and then if you decide to sell it later, you have to pay capital gains on the depreciation. You can't exclude it. We were in that situation and it was a tax liability when we sold it. But you probably know all that from your own rental in Alaska.
If I had the money to buy a rental, I would buy one in South Kohala. There is more constant demand. But it was overbuilt a lot in this decade, so you would need to get it at a good price, and figure out if you can afford it at 50% or less occupancy. Actually I wouldn't recommend it unless you can afford to keep it even if you get zero occupancy. There are lots of foreclosures going on over there, of people who had the same game plan as you do.
"Sometimes it's not enough to know what things mean, sometimes you have to know what things don't mean." — Bob Dylan
As a rental, your property is taxed on the commercial rate per square foot, not the residential rate.
Also, you are required to depreciate the rental by the IRS, and then if you decide to sell it later, you have to pay capital gains on the depreciation. You can't exclude it. We were in that situation and it was a tax liability when we sold it. But you probably know all that from your own rental in Alaska.
If I had the money to buy a rental, I would buy one in South Kohala. There is more constant demand. But it was overbuilt a lot in this decade, so you would need to get it at a good price, and figure out if you can afford it at 50% or less occupancy. Actually I wouldn't recommend it unless you can afford to keep it even if you get zero occupancy. There are lots of foreclosures going on over there, of people who had the same game plan as you do.
"Sometimes it's not enough to know what things mean, sometimes you have to know what things don't mean." — Bob Dylan