Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev Thread | Next Thread
Author: csimonsl Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120812  
Subject: Rental Income Date: 2/22/1999 11:49 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
HELP!! Could somebody please explain how I should figure Rental Income. This is my situation.

My husband and I bought our house in 1996. He just got a new job last year that forced us to move, and instead of selling our new house, we decided to rent it. Our tenants pay exactly what our mortgage payment is. So, in a sense, we are making no money on our rental. How do I show that on my taxes? I enter the amount from the income, but what about the expense. Right now, my taxes say that we made profit on the rental. But, we didn't. Any help would be appreciated. Thank you!
Print the post Back To Top
Author: JABoa Big gold star, 5000 posts Feste Award Nominee! Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10721 of 120812
Subject: Re: Rental Income Date: 2/22/1999 2:19 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
You should be apportioning your income and expenses. Suppose for the sake of argument you started renting the place out on September 1. Then your mortgage interest and taxes for January through August would be deducted on Schedule A, as usual.

Your rental income should be reported on Schedule E. Your mortgage interest, taxes, repairs, and other expenses associated with the rental from September through December should also be reported on Schedule E, they reduce your net income. TMFTaxes and others tell me you should also be depreciating the property.

Even though you have no net cash flow, you do have income from the rental, because your tenant is now paying the principal on your loan. That is real money and will be taxed.

I am assuming here that you are collecting the rent yourself and are actively managing your property. If you have an agent doing that stuff for you there are different rules about passive real estate ownership. That's more complicated, I think, and I will leave it to the pros to advise you.

Print the post Back To Top
Author: gmc123 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10829 of 120812
Subject: Re: Rental Income Date: 2/23/1999 1:34 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
My husband and I bought our house in 1996. He just got a new job last year that forced us to move, and
instead of selling our new house, we decided to rent it. Our tenants pay exactly what our mortgage
payment is. So, in a sense, we are making no money on our rental. How do I show that on my taxes? I
enter the amount from the income, but what about the expense. Right now, my taxes say that we made
profit on the rental. But, we didn't. Any help would be appreciated. Thank you!


You need to put your rental income and expenses on schedule E. Basically, your income is going to be the rent they pay and your expenses will include: mortgage interest, property taxes, MIP, homeowner's insurance, association fees, cleaning, maintenance, advertising, legal fees, and depreciation (usually the big one next to interest). Since this is the first time you've ever dealt with renting out your property, I'd really suggest you talk to a pro on how to handle the depreciation. You REALLY should get an appraisal because the depreciation and gain/loss when you do finally sell will be affected by the value when you converted the house from personal to rental.

Print the post Back To Top
Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 10862 of 120812
Subject: Re: Rental Income Date: 2/24/1999 1:37 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
[[
HELP!! Could somebody please explain how I should figure Rental Income.
This is my situation.

My husband and I bought our house in 1996. He just got a new job last year
that forced us to move, and instead of selling our new house, we decided to rent
it. Our tenants pay exactly what our mortgage payment is. So, in a sense, we are
making no money on our rental. How do I show that on my taxes?]]

It can get pretty complicated. And you might really want to consider the assistance of a qualified tax pro. It is certainly WAY too complicated to give you any REAL information here. The best that I can do is to lead you to the IRS web site, and advise you to download/read IRS Publications 551,527, and 537 for your MINIMUM required reading.

TMF Taxes
Roy

Want to learn more about taxes and investing? Then we have a deal for you!! The Motley Fool Investment Tax Guide is now available through Fool Mart. Be the first one on your block to own this masterpiece. It'll help you with your 1998 taxes, and it's never to early to start planning for your 1999 taxes. So just click on this link (http://www.foolmart.com/market/product.asp?pfid=MF+013+I) to read more about this amazing collection of tax information. (Apologies for the shameless plug…but it is a pretty good book…if I do say so myself). In addition, if you would like to visit the Taxes FAQ (Frequently Asked Questions) area, click on http://www.fool.com/school/taxes/taxes.htm and you'll be right at the home page. Check it out. Finally, if you need to get to the IRS web site, click on http://www.irs.ustreas.gov to go directly there.


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
UnThreaded | Threaded | Whole Thread (4) | Ignore Thread Prev Thread | Next Thread
Advertisement