If Im renting a small house out but barely making enough to pay the mortgage do I have to pay taxes on it?

Question

I know I have to pay property tax but do I have to file it as income earned? Like capital gains or anything? How much percentage do you think? THANKS!

Answer 1

You will need to fill out a Schedule E so track every single expense for the year for the rental including mileage to drive there to clean or repair or even just inspect. Have an accountant help you especially the first year so you get all the deductions including the correct depreciation. Even if you don't take the depreciation you need to account for it when you sell so it will increase the profit then.
After deducting depreciation, property tax, interest, insurance, repairs and maintenance, advertising, cleaning supplies and mileage you may lose money but you can use the loss to offset other income. If you do have a profit you will pay income tax on it but not self employment tax it isn't earned income.

Answer 2

First I should say I'm NOT with the IRS, FBI, or CIA--, and could care less about your income.

However, ANY income, (the key word is "ANY") is still OTHER income no matter if it came from selling cool-aid or renting property. "Income is Income" my accountant tells me.

Now, the key to everything is---, who knows about it? And are you going to expense it as a "business" or not?

Are you paid with checks or cash? If its checks, you are screwed. Audit trail big time direct to you.

Cash? Zilch. Very hard to audit.

I would talk to a good CPA or Accountant you can trust, to see if it makes sense to turn it into a business.

But-- If you don't, all it takes is for an upset tenant to drop a dime on you and make a phone call to the IRS hot-line--, and you can have Tax Fraud, and big trouble in River City.

Also, if your property is insured, it is considered fraud in some places if you don't tell the insurance company it is now "rental" property and no longer your personal residence.

The rates go up for rentals, and so do the risks due to smoking, drinking, damages, etc..

You decide. Its a gamble like playing "Who do you trust?

I got out because it is a zoo out there, with bad tenants, insurance, evictions, theft, drama, drama, and repairs.

Call me "An Ex-landlord" (cuz it ain't worth it anymore.)
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Answer 3

I am assuming you mean income tax on the rents you are receiving? There are forms for reporting rental income. i believe that you only have to pay tax on your net income. Suppose your mortgage payment is $1000/mo and you charge your tenants $1100/mo hen your income is $100 per month and yes you have to pay rental income tax on that.

Answer 4

yes, you report all your rental incomes and expenses on Schedule E - Supplemental Income and Loss. If your total incomes are greater than your expenses, then you have a net gain and it is taxed at your ordinary income tax rate. If your total incomes are less than your expenses, then you have a net loss and your loss is deducted from your ordinary income, hence reduce your tax liability for the year.

Answer 5

are you selling a house? if so if you lived there for several years then you can get 250k tax free. when you pay property taxes are you getting money for doing it? do you report state or city tax from your purchases as capital gains?