Forum
« Do banks do mortgage assignments? Coop inspection? »
January 22, 2007
Rental Income Tax Question
I live in a 2 family and rent out the other apartment to some friends. The rental helps me meet my mortgage payment and in no way results in a profit. Do I have to report this as rental income or is there some other classification it falls under?
Comments
yep .
it's considered income so you must claim it .
Posted by: eletricgreek at January 22, 2007 4:16 PM
You have to report it but you will not pay taxes on it. Actually most likely you will get a deduction since between expenses and depreciation of the property it will result in a tax loss. I would contact a CPA about this issue before you file anything this year.
Posted by: Anonymous at January 22, 2007 4:35 PM
anon: 4:35 here again. I meant to say you will most likely not have to pay taxes on it. I don't know your financial situation but in most cases you don't make enough in rental income (when you still have a mortgage) to come out ahead of the depreciation so its most likely going to be a tax writeoff not taxable income.
Posted by: Anonymous at January 22, 2007 4:40 PM
Anyone have a good CPA who is familiar with this sort of scenario?
Posted by: Anonymous at January 22, 2007 4:48 PM
any CPA is well versed in this scenario. the rental income is like gettting a 1099. Its untaxed cash coming to you. Like a 1099 you have to offset the tax free income
Posted by: Anonymous at January 22, 2007 6:46 PM
This is taxable income. It does not affect your mortgage interest deduction - it is fully deductible. Turbotax can be helpful.
Posted by: anon at January 22, 2007 8:35 PM
I agree you need an accountant's help, but think of it like this: if you have a 2-family, the portion of the home you rent is the business, and income from it is taxable. That income can be offset by the portion of the mortgage that corresponds to the portion of the house rented. (For example, if you rent out 1 of 3 floors, 1/3 of the mortgage is an expense against the income, but not the entire mortgage.) There are also a portion of common utilities and other maintenance to offset that income, as well as depreciation.
But, if some portion of the mortgage is offsetting the rental income, you cannot ALSO take that same portion as a personal mortgage interest deduction - only the portion that corresponds to the part that is your home.
I'm not a CPA, so the above may not be entirely accurate, but it's just to give you some understanding of how it all works.
Posted by: Anonymous at January 22, 2007 9:39 PM
Post a comment
Please be patient while your comment is published. It may take a moment.