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Renting your home tax question.
Posted on 10/10/19 at 8:35 am
Posted on 10/10/19 at 8:35 am
I guess this is a bit too wordy for google.
If I move elsewhere and rent my home with an existing mortgage, does all of that income have to be claimed on taxes, or just some? ( the extra on top of what the payment is)
Ex:: mortgage is 1000/mo, rent it out for 1500/mo. Am I claiming an extra 18,000 in income, 6000, or none?
One would assume itd be on the 6000 extra, minus expenses for maintenance etc.
If I move elsewhere and rent my home with an existing mortgage, does all of that income have to be claimed on taxes, or just some? ( the extra on top of what the payment is)
Ex:: mortgage is 1000/mo, rent it out for 1500/mo. Am I claiming an extra 18,000 in income, 6000, or none?
One would assume itd be on the 6000 extra, minus expenses for maintenance etc.
This post was edited on 10/10/19 at 8:40 am
4
Posted on 10/10/19 at 9:01 am to Gusoline
No tax expert here, but I think you will be on the hook for any gains, minus your expenses for the property (getting it ready for a renter). Also keep in mind of homestead exemption, if your county or parish has that. If you have it and switch it to your new house, your house payments for your old house will go up, since it is taxed at full value. In your case, sounds like you will be claiming 6000 more income minus expenses.
Posted on 10/10/19 at 9:18 am to Gusoline
You do not get to deduct the mortgage. You do get to deduct the mortgage interest, taxes, home owners insurance, depreciation, and any other maintenance expenses on the property.
This is what makes it tough to rent a property with a mortgage. If your monthly net is $500, any repairs, turnover and repair of damage by tenants, etc. comes out of that.
From experience, you can’t collect a deposit large enough to cover the damage a crappy tenant can cause. And you can’t sue someone without assets either.
It’s not a calculator I’ve been able to find but the true return is something like: Appreciation + Growth in equity - time spent - expenses = profit.
It’s not an easy thing to do. I was a shitty landlord because I couldn’t kick people out when I should of because I have a soft spot for shitty people’s kids. I had to leave the game having barely made any money after five years. Certainly at a loss if you consider my time wasted.
Commercial works though. No kids to worry about and people don’t want their business sign taken down bc they didn’t pay their rent.
This is what makes it tough to rent a property with a mortgage. If your monthly net is $500, any repairs, turnover and repair of damage by tenants, etc. comes out of that.
From experience, you can’t collect a deposit large enough to cover the damage a crappy tenant can cause. And you can’t sue someone without assets either.
It’s not a calculator I’ve been able to find but the true return is something like: Appreciation + Growth in equity - time spent - expenses = profit.
It’s not an easy thing to do. I was a shitty landlord because I couldn’t kick people out when I should of because I have a soft spot for shitty people’s kids. I had to leave the game having barely made any money after five years. Certainly at a loss if you consider my time wasted.
Commercial works though. No kids to worry about and people don’t want their business sign taken down bc they didn’t pay their rent.
Posted on 10/10/19 at 11:56 am to Gusoline
If you don't already use TurboTax (assuming you do your own taxes), I suggest you use TurboTax. It will walk you through everything. You enter the full rent and the IRS expects you to rent it at full market value. You then enter the various expenses (interest, property taxes, insurance, maintenance and repair) and TT will calculate your depreciation. Your actually tax basis will essentially be your actual out of pocket cash plus principle on the loan minus depreciation.
Posted on 10/10/19 at 1:11 pm to K E V 8 4
I do, thanks.
Posted on 10/10/19 at 3:18 pm to Gusoline
You have $18,000 in rental income.
You deduct the portion of your mortgage payment that is interest.
You can deduct the amount paid (either directly or via your mortgage company escrow) for insurance and property taxes.
You can deduct any amounts spent on legal fees, commissions, repairs and maintenance, etc.
Then you can take depreciation. This is what's going to substitute for not being able to take a deduction for the loan principal. You are going to estimate the fair value of your house (not counting the land) and depreciate that over 27.5 years.
You deduct the portion of your mortgage payment that is interest.
You can deduct the amount paid (either directly or via your mortgage company escrow) for insurance and property taxes.
You can deduct any amounts spent on legal fees, commissions, repairs and maintenance, etc.
Then you can take depreciation. This is what's going to substitute for not being able to take a deduction for the loan principal. You are going to estimate the fair value of your house (not counting the land) and depreciate that over 27.5 years.
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