I bought a house in TX, but don't live there. I rent it to other people. The rent pays the mortgage.
2006-10-08 00:56:21 · 4 answers · asked by CAPTDerek 2 in Business & Finance ➔ Renting & Real Estate
Congrats, you now own rental property! There are lots of new rules, and a new tax form you'll have to file, but it's not toooo hideous. You'll file the Schedule E, and yes, you have to report the income, but you can also deduct the mortgage interest. But wait! There's More! You can deduct improvements you make to the house, utility bills you pay, advertising, insurance, legal fees, maintenance, and more! You can also depreciate the value of the ENTIRE house (assuming you're renting the whole thing), which may actually put the property at a loss, which means you pay less in taxes, not more.
My best advice to you is to sit down with a tax professional as soon as possible. They can walk you through what you can and can't deduct, and tell you what records you need to keep. Some places can even give you a record book - a great place to keep all your info. and for all of this, you're probably not going to pay a dime, especially if you've paid to have your taxes done there in the past. Then, when it comes time to file, let them do it this time, and explain it all to you. Then, if you're the kind of person who wants to file yourself, you'll have the correct information to do it yourself.
I've attahced the IRS publication on this matter, but feel free to let me know if I can be of more assistance.
2006-10-08 02:17:01 · answer #1 · answered by Katie Short, Atheati Princess 6 · 0⤊ 0⤋
No, you do depreciation and you file as a landlord. You offset your costs against the profit you make. You really need to talk to an accountant because if you don't know what you are doing with out of state property you might be in for a very nasty surprise at tax time. A good accountant can set you on the right track and help you make intelligent choices that won't cost you down the line.
2006-10-08 03:28:36 · answer #2 · answered by Anonymous · 0⤊ 1⤋
The only deduction you could take would be the interest portion of the mortgage payment.
2006-10-08 01:00:33 · answer #3 · answered by Gone fishin' 7 · 0⤊ 2⤋
Yes, but you also have to declare the income.
2006-10-08 00:58:00 · answer #4 · answered by hirebookkeeper 6 · 0⤊ 1⤋