Waitingtobuy. I’m not a tax expert, by any stretch, but here is my understanding.

You are allowed to write off up to $25,000 of loss in your rental property. There is a separate form you file along with your 1040, after you declare your rental income.

You can write off mortgage interest, property taxes, HOA fees, mileage driven to/from your rental property, and you are allowed to write off depreciation.

That is the value of the home (I think land is excluded from the depreciation calculation). The useful life of your property is 27.5 years, which you must use for your depreciation calculation, so you get to claim 1/27.5 as a depreciation expense you can write off each year.

All minor repairs, cleaning supplies, etc. can be written off as a direct expense. However, if you do a major upgrade, like put new cabinets in the kitchen. . . The value of that improvement must be added to the value of your home, and used in the depreciation calculation.

Another important thing to consider. You can only write off the full amount of your “loss” of your Adjusted Gross Income is less than $100,000. You lose a write off amount for every dollar over that you make. If your adjusted gross income is $150,000 or more, you cannot write off any losses on your rental income. The amount of your loss sits in a separate account, and you can only write it off against your capital gains upon sale of the house.

Again, I am no expert, this is my rudimentary understanding of the process, which is why I employ a tax professional each year. This stuff makes my head hurt!

..of course any capital loss carryover depreciates as the dollar depreciates, but that’s another point of discussion. IE your $1 loss today isn’t exactly $1 when you get to use it.

that’s why (if you can), putting any loan interest on Schedule A primary mortgage interest deduction versus Schedule E rental cost is a better option at times me thinks.

See, i told you the government encourages you to use your primary home as an ATM.

[quote=SD Realtor]My biggest concern is that certain regimes may target the tax benefits of rental property owners in the not to far future. The hungrier the political party in power is for tax revenues, the more fearful I become. It will not surprise me a bit if in the next 4 years many of these benefits get hammered.[/quote]

In all honesty, I don’t think there will be any kind of asset class in which the government doesn’t utterly fvck it up for most of us moving forward.. Not just rental property, but every possible type of passive income.

All folks tucking money in to a Roth IRA… Good luck there… You really think it’s not going to be taxed??? Sure they won’t call it a tax. It will be called a “maintenance fee” or some B.S. like that.

Ultimately, our tax system and taxation will be so rampant, the only way folks will be able to make it is by cheating on their taxes by taking investments under the table and overseas in countries that have no deal with the U.S. government… You know, what currently only really really rich people and corporations do right now….Heck, I don’t blame small businesses for shutting off their registers for a few hours each week and emptying out the cash registers. It’s pretty funny because I talk to a few small biz owners, and while on paper my W2 looks a lot bigger than their income, effectively what they take home is a lot larger for doing just that…. And I mean a lot…So it’s funny when uncle sam wants me to report 18.40 interest income on a 0.001% savings account, so it can take 20% or so of that, when you have folks that don’t even both to pay their fair share.

Since our public welfare/helpfare for retiring older people AKA safetynet won’t be there anymore, our government will ultimately give the rest of us the middle finger to those who are trying to create our own safetynets and taxing the hell out of us so that rather than being able to retire in our older age (since we clearly won’t be as productive as our younger/self-entitled generation), they’d rather us slave away as a forever W2 employee, assuming that U.S. corporations would even hire us because of our old age and propensity to seek cheaper more efficient workers overseas…

Welcome to the new America. Where it really sucks to have documented income. Thank you bailout. thank you social security. thank you medicare. thank you ridiculous military spending. Thank you leftists. Thank you rightists. Thank you banks. Thank you Fannie and Freddie. Thak you government unions and pensions. Thank you croynism…Thank you tax repatriation rules. We’ve done a pretty good job fvcking up this country collectively.

Speaking of taxes… How appropriate is the timing of this article.. Yup. That’s right. Maybe that might want to take away the depreciation writedown for you and me on our rentals, but they sure don’t want to do it for our corporations… Makes you wonder who/what really ends up paying a fair share..

Notice the last paragraph. Neither party gives a crap… We’re screwed.

http://finance.yahoo.com/news/companies-popular-provision-avoid-income-203552518.html

Still, both President Barack Obama and Republicans have backed an expansion of the tax break through bonus depreciation, which gives companies an even faster and larger first-year write-off. Many policymakers backing accelerated depreciation have cited the need to jump-start the economic recovery.

I’m no tax expert either, and one question I had is can I write off my principal mortgage payment (on rental property) as a loss when the property is both advertised as available and vacant.

My understanding is that the answer is no you can’t write off the principal amount, but you can write off the interest under those circumstances.

[quote=briansd1][quote=flu]
You know, what currently only really really rich people and corporations do right now….[/quote]

Then you should support the Buffet rule.[/quote]
No, I support the “no empowered extreme government that has the ability to pass ridiculous spending bills” rule.

[quote=paramount]I’m no tax expert either, and one question I had is can I write off my principal mortgage payment (on rental property) as a loss when the property is both advertised as available and vacant.

My understanding is that the answer is no you can’t write off the principal amount, but you can write off the interest under those circumstances.[/quote]

Mortgage interest is an allowable rental property expense when the property is occupied or available and advertised for occupancy.