The IRS Deductions Blog

Posts Tagged ‘rental’

Question: Business Loss or Landlord Deduction?

I have property that I am currently renting. This property is mortgaged and I am able to deduct my interest from my taxes. However, the rental income I receive does not cover the mortgage or my expenses (that is, because of the market, I charge less in rent that I pay in mortgage and maintenance each month). Is it possible to declare this loss on my taxes? I know I have to report the rental income, but it seems I should also be able to report this loss. Is it a business loss or is this considered part of my “expenses” on advertising/caring for the property? Are there specific forms to use (like form c for business loss)?
This property is in another state – so it is not a shared duplex. If I use TurboTax, will this automatically fill out items on Form E, including this loss (I know TurboTax uses this form to allow me to deduct expenses).

Answer: Yes, you would report rental income and expenses on Schedule E of Form 1040. You would report any expenses involved in the rental property, i.e. interest, taxes, insurance, utilities, maintenance, repairs, advertising, etc. Dont forget that you are also able to deduct depreciation on the property and any improvements. The basis used is usually your cost. If you converted your home to rental property, you would use the lesser of the fair market value or adjusted basis. The recoverable period for residential rental property is 27.5 yrs.

If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property.

Yes, Turbo Tax will automatically generate a Schedule E. It will ask you questions regarding your rental property and automatically fill out the required forms, including Form 4562 for depreciation.

Items on Amazon Right Now for Landlord Tax Deductions:

Every Landlord’s Tax Deduction Guide $26.12 The only book on tax deductions specifically for residential landlords!Named a “Top 10 Real Estate Book” by Robert Bruss, syndicated real estate columnistIf you own rental property, you should be taking advantage of the many tax write-offs available. Every Landlord’s Tax Deduction Guide gives residential landlords the plain-English guide they need to save money on taxes — without the services of …

First-Time Landlord: Your Guide to Renting out a Single-Family Home (USA Today/Nolo Series) $16.78 Whether or not you call yourself a “landlord”, when you rent out a house you’ll want to do it right! The “Landlording 101″ course for new rental property owners who are first-time landlords by way of an inheritance, divorce, investment, purchase for a family member, or a move to a new house. 90% of small properties are owned by individual landlords, and millions in this group are balancing the…

Every Landlord’s Tax Deduction Guide $39.99 The only book on tax deductions specifically for residential landlords! Named a “Top 10 Real Estate Book” by Robert Bruss, syndicated real estate columnistIf you own rental property, you should be taking advantage of the many tax write-offs available. Every Landlord’s Tax Deduction Guide gives residential landlords the plain-English guide they need to save money on taxes — without the services of…

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7 Smart Steps Every New Homeowner Should Take

Dont let the excitement of owning your own home lead you to make bad financial decisions.

Rental Property Advice : How Much to Charge for Rent

Question: Mom and I sold our condo, how do we each report the taxes?

My mom and I owned a condo for 1 yr and 9 months in WA state. We sold it and we’re trying to figure out how to split the resulting profit (approx $40K total). We each received wire transfers from the escrow company for $20K. Now it’s tax time and we’re trying to figure out what deductions are available, and how to report any applicable taxes and what the proper forms for this might be? In particular, we are wondering if we can include the closing costs we incurred as an adjustment to our cost basis and ultimately reduce the portion of the $20k that is taxable. Also, as I changed jobs 6 months after we bought it (bought in June 2004, sold in Feb 2006). Wondering if I can take a partial exclusion on capital gains due to having job location changes in Nov. 2004, and again in July 2006). Neither job change was out of state but did effect length of my commute. Thanks so much!

Answer: The first answer is incorrect in the final paragraph. You can, indeed, claim a partial exclusion provided you meet certain conditions. See the link below, in particular page 15. The issue I see is that you changed jobs in Nov 2004 but did not sell it until Feb 2006. That might be viewed as an excessive length of time to hold the property after changing jobs.

Items on Amazon Right Now for Condo Tax Deductions:

First-Time Landlord: Your Guide to Renting out a Single-Family Home (USA Today/Nolo Series) $16.78 Whether or not you call yourself a “landlord”, when you rent out a house you’ll want to do it right! The “Landlording 101″ course for new rental property owners who are first-time landlords by way of an inheritance, divorce, investment, purchase for a family member, or a move to a new house. 90% of small properties are owned by individual landlords, and millions in this group are balancing the…

Ten tax tips to save you money

Millions of Canadians pay more tax than they should. Moneyville’s weeklong continues with the sorts of tips that will help you avoid the same fate.

Homebuyer tax credit information

Items on Amazon Right Now for Top Ten Tax Deductions:

Top Ten Overlooked Tax Plays For The Individual $2.99 New 2008 Tax Year Edition for filing in 2009, which includes critical Stimulus Refund Check information! 95% of Americans over pay their taxes or do not receive their full refund back. Joseph Templin lays out over ten critical tax plays, each with the potential to save at least $100 but usually more. This book gets you better prepared to ask the right questions and bring the right information to y…

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Question: In UK property renting, what’s are the Deductible Expenses against rental income?

…and can anyone point me towards and example tax calculation for a buy-to-let property

Answer: The short answer is anything to do with the letting – there is no standard as everyone’ situation is different. Ask yourslef, is this expenditure due to the letting or not?
Soem examples might be: mortgage interest, 10% wear and tear (if furnished), repairs and renewals, redecoration, agents fees, insurance, etc.
the tax calculation will be part of your personal self assessment and HMRC provides software for this.

Items on Amazon Right Now for Deductible Rental Property Expenses:

Every Landlord’s Tax Deduction Guide (2nd Edition) $25.00 This bestseller is the only book on tax deductions specifically for residential landlords! If you own rental property, you should be taking advantage of the many tax write-offs available. Every Landlord’s Tax Deduction Guide gives residential landlords the plain-English guide they need to save money on taxes — without the services of a high-priced accounting firm. This book explains how to ma…

Town of Loxley approves 2010-11 Budget

LOXLEY, Ala-The Town of Loxley unanimously passed their 2010-11 Budget on Monday night with revenues totaling $2,838,800 and expenses totaling $2,882,732 creating a deficit of $43,932 in the General Fund. Utility Fund Budget income is $1,798,011 with expenses at $1,050,190 giving a net ordinary income of $747,821.

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Question: Are termite contracts deductible on rental properties?

I have a rental property in Louisiana that I purchased a termite contract for this year for $700.00. Seem like I should be able to claim it as an expense against the income that I recieved on the property. Does anyone know if I can claim it, and what that would fall under? All I see in Turbo Tax is pesticides listed as a supply, but it seems to be more of a service than a supply.

Answer: It is 100% deductible. I think I would classify it as an “other expense;” Ttax is meant for the country as a whole and termites aren’t much of an issue for most of the country.

Almost anything is deductible for rental income. Anything reasonable and necessary for the operation of a trade or business is deductible as such, that includes rental property. The greyish areas are the home office which is necessary for managing the rental(s) – just how much was actually devoted to the business? Repairs and Maintenance (or was it actually an improvement?) Business or personal (just how much of that trip to Hawaii was to manage that condo?)

Items on Amazon Right Now for Tax Deductible Expenses Rental Property:

Every Landlord’s Tax Deduction Guide (2nd Edition) $25.00 This bestseller is the only book on tax deductions specifically for residential landlords! If you own rental property, you should be taking advantage of the many tax write-offs available. Every Landlord’s Tax Deduction Guide gives residential landlords the plain-English guide they need to save money on taxes — without the services of a high-priced accounting firm. This book explains how to ma…

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PHOTO: For rent … landlords have to master paperwork to make the most of claims. Photo: Ben Rushton