Next, let’s consider Rental property. Rental property is handled on Schedule E. Mortgage interest on rental property is not an itemized deduction of the interest. It is considered a business expense under schedule E, as are the insurance, property taxes and maintenance. The expenses deductible against rental income are more generous than the deductions for the homeowner
all other forms of interest.
The law governing rental property expenses is based on the same laws applied to business expenses for any business. They are not taxed on their Gross Revenue. They are taxed on the difference between their gross revenue and their expenses. Expenses include their lease, employee salaries, wages, materials, insurance, local taxes, etc.
So, rental property is taxed like a business. Why ? Well, because it is a business.
It is highly unlikely (impossible) that we would alter the tax code to tax businesses on other than net profits.
