Housing rental income vs. loss question (taxes)

NEW -> Contingent Buyer Assistance Program
T

theBigD_IHB

New member
Hello,

Question regarding rental income. For example, if I have a mortgage of 3,500/month, plus HOA of 100, taxes of about 700, for a total payment of 4,300, and I get actual rent of about 3,500, I have a loss of about 800/month to pay for everything.



If I show an 800/month loss, how does that affect my taxes? Do I still have to pay taxes on the rental income? Do I get to show a loss of 800*12 every year? How does this work? Thanks!
 
[quote author="theBigD" date=1215939827]Hello,

Question regarding rental income. For example, if I have a mortgage of 3,500/month, plus HOA of 100, taxes of about 700, for a total payment of 4,300, and I get actual rent of about 3,500, I have a loss of about 800/month to pay for everything.



If I show an 800/month loss, how does that affect my taxes? Do I still have to pay taxes on the rental income? Do I get to show a loss of 800*12 every year? How does this work? Thanks!</blockquote>


Talk to a tax expert, there are so many variables that we do not know its quite difficult to give you a accurate answer.



Overall, its best to avoid renting at a negative cap rate. As always the laws can change in a heartbeat, so its best to check with a tax expert.

good luck

-bix
 
You would not only write-off the $800/month loss but also the depreciation on the rental property (the depreciable value is usually the purchase price plus any improvements less the assessor's land value). Also, you use Schedule E to account for your rental properties. You can take an active real estate tax loss of up to $25k per calender against your ordinary income. Any loss above the $25k amount is carried forward.
 
Troj's answer is incomplete and Bix's answer is just plain wrong. Sorry Bix.


Losses from rental properties <strong>MAY</strong> be deductible up to $25,000 for some taxpayers. All losses may be deductible for some real estate professionals, and for some taxpayers, not all losses up to the $25,000 limit are deductible. It is not possible to give you a complete answer here. Your deductible losses will depend upon a multitude of personal circumstances. I wouldn't recommend doing your own tax return if you will be deducting re losses. About 85% of self-preparers screw up their schedule E.
 
[quote author="awgee" date=1215953146]Troj's answer is incomplete and Bix's answer is just plain wrong. Sorry Bix.


Losses from rental properties <strong>MAY</strong> be deductible up to $25,000 for some taxpayers. All losses may be deductible for some real estate professionals, and for some taxpayers, not all losses up to the $25,000 limit are deductible. It is not possible to give you a complete answer here. Your deductible losses will depend upon a multitude of personal circumstances. I wouldn't recommend doing your own tax return if you will be deducting re losses. About 85% of self-preparers screw up their schedule E.</blockquote>
I did forget to qualify my response. There are income limitations on the active real estate tax loss deduction. Also, there are rules in terms of whether a real estate tax loss is active versus passive. Most people should consult with a tax professional to determine if they would qualify for an active real estate tax loss.
 
You must log in or register to reply here.
Back
Top