can rental loss be deducted from a primary residence? can losses due to unforseen circumstances be deducted?

Question

we had to relocate half way through 2006 due to unforseen job closing. we now pay high rent near our new jobs and are trying to carry the mortgage by renting the former house until it sells, which it hasn't yet because the market is slow. we are losing money on the home, can we declare losses against our 2006 income? we assume that if we declare it as a rental property to take such losses we cannot still take the mortgage interest deduction, or can we still for the number of months we lived there? can we declare and deduct losses currently being accrued where we have had to relocate, as we now lose each month due to high rent necessary to live within a commute distance to work (we both have 1-2 hour commutes and live in between the two new jobs)

Answer 1

Yes you can claim the rental income less the mortgage interest, real estate taxes, other costs and depreciation. The deductibility in the current year depends on your adjusted gross income. If that is too high you can deduct the loss in the year you sell the house.
This rental will not interfear with the exclusion on the gain on sale of a primary residence unless it has to be rented to the extent that it puts you in a position where you don't meet the two out of five year test any longer.

Answer 2

1) Rent at the new location is not deductible as it is not a temporary relocation.

2) Interest and property taxes on the old home are already deductible. Converting it to a rental would allow you to depreciate the home. However, you can not just call something a rental. You must actively be trying to rent it. A ton of deductions on a rental with no rental income would attract some attention from the IRS.

3) The "losses" you are accruing each month are personal in nature and non-deductible. The long commutes each day are also not deductible.

Answer 3

You would take the mortgage deduction on Schedule A for half the year you lived in the house. For the other half you would file a Schedule E and report rental income and expenses.

You may be able to deduct moving expenses if your new job location is at least 50 miles from your former home. You can check here to see if you qualify:
http://www.irs.gov/taxtopics/tc455.html

Answer 4

Sorry, no. Losses on the sale of a own position of abode are in no way deductible. And to characteristic insult to harm, the $37k forgiven will probable be taxable earnings to you. you are able to facet-step that in case you've been bancrupt on the time of the forgiveness. in the adventure that your complete debt became more advantageous than your complete sources you're seen bancrupt. The IRS will require you to educate that, notwithstanding.