What tax benifits do i get for renting my house out.?

Question

I have lived in it for one year. Its in North Carolina. Do i need to change my mortgage?

Answer 1

If you change your mortgage you will end up paying a HIGHER interest rate since it will become a business.
Since you lived there for a year you were in good faith with the lender as principal residence.
The person on Ask that talks about insurance has good advise. Deminately call your insurance agent and change that status.

Dollar for dollar, everything you spend on the place is tax deductible:100%
Advertising
Supplies
Cleaning & maintenaince
Repairs
Travel to - and from and shopping....
mileage
legal & professional fees
Utilities paid
Capital improovements like
new furnace & Air Conditioning
Roof Replacement
Replace Hot water Unit
Replace carpet
Replace stove, Fridge......Appliances you provide
Anything you replace has to be depreciated. that is where the IRS gets you because you have to go by their rules. you only get to deduct a portion every year for the "useful life" (they determine it)
Get a good tax preparer that has experience in rental unit tax
A certified tax preparer that does taxes all year, not just durring tax time. I do NOT use H&R block for this reason.

Answer 2

You don't need to change your mortgage.

The tax implications are thus:

Since it is no longer your primary residence, you cannot take the mortgage tax deduction on Schedule A.

You must treat the house as a business.
You will have income, which is the rent, and expenses, which include the mortgage interest. The IRS also requires that you include depreciation of the structure. There are a few ways to treat this, which you should discuss with your tax accountant.

Keep in mind, too, that the depreciation you take gets subtracted from the cost basis of the property when you sell it.

j

Answer 3

You should probably change your insurance.

As for tax benefits - there are two issues. If you sell it, there will be some tax consequences depending on how long it was rented, because now it's an "investment property".

On the other hand, you can deduct nearly all improvements and repairs made to the house, because they're done in the name of maintaining an investment/business.

Consult your accountant for information specific to you (if you don't have one, make an appointment with one and just buy a half hour or hour of their time). If the house could use some work, this might be a way to get it accomplished while bringing in some bucks and getting you a tax break in the process.

Answer 4

No need to change your mortgage. Are you going through a Property Mgmt company to handle everything or doing it yourself. Either way, you would file a Schedule E. You get to deduct expenses towards the house to include insurance and property mgmt fees but will have to claim all rent from the house.

Answer 5

You will be able to write off all cleaning supplies, snow removal, yard work & maintenance IF you are NOT living in it with your renters. Check with an accountant for %'s when doing taxes if you plan on living in it too.

You WILL NEED to let your insurance agent know you are renting it out incase of a fire or something else. Insurance companies try their best to NOT pay you and will find aloop hole if you did not notify them of this.

Just be sure to have someone smarter than y ou do you taxes. You obviously ARE NOT a tax accountant or you would not of asked this question here. Having an accountant, even with something as simple as rental property can be a valueable asset. Ours has saved us thousands of $$$ because he knew of legal deductions I have never heard of !

Best of Luck!

Answer 6

None.