I just had my taxes done, I own 2 houses and 1 is a rental?

Question

I thought you could write off your total mortgage payment when you rent a house, especially when your mortgage is higher than what you get from the renter, my tax guy said only the interest is a write off is this true?? and of course all the expences are a write off also.

Answer 1

You should be able to write off the interest on the house, at first I thought what you thought,

Answer 2

Think of it this way. If a house costs $50,000 , you put $10,000 down, and get a loan for $40,000 to purchase the property. You take from (credit) your bank account the $10,000, you add to (debit) your Long Term Liabilities the $40,000 and you add to (debit) your assets 1 house valued at $50,000.

You have $10,000 in equity while the bank has $40,000 in equity valued as a loan.

Whey you pay your mortgages, you are in effect exchanging money for equity in the property. This is considered an equal trade and is not deductible.

Not only are expenses deductible, be so are they property taxes, tools purchased to work on the property, mileage, accountant's fees, insurance, etc., etc., etc.

Take it from me, take every expense you can legally take. If you have to purchase a tool, write as much of it off as you can against your rentals.

If you have to drive someplace make sure you are doing so for your rental, and take at least part of that off.

Good Luck

Answer 3

You can only write off the interest. If you have a loss in income as your business, you can write that off also.

In other words, if the mortgage and expenses are higher than the rent your business lost money. But you have to be set up as a business.

Answer 4

You can claim the interest on the two houses that you own, plus the property tax. On the one that you rent out you can claim intrest, and if you are involved with that house (like doing repairs, etc) instead of hiring a firm to rent it out, you can claim expenses. Anything beyound that, call your local Jackson Hewitt.

Answer 5

just interest