Rental income is total rent minus mortgage payment correct? Or do I just list total rent collected then ithe program will ask about mortgage later?

Forum|Forum|6 years ago
May 31, 2019
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TurboTax Premier Online

Best answer by LeslieB

Rental income is the total amount you received from all sources for your unit. Later in the questionnaire, you will enter all of your expenses including mortgage interest information for the property in order to reduce your income and calculate your net profit or loss.

Please note: Rental income is NOT total rent minus mortgage payment. You must input your gross income and record your expenses separately.

Thank you for choosing TurboTax. Have a wonderful day. ~ Leslie

LeslieBAnswer

Employee

Please note: Rental income is NOT total rent minus mortgage payment. You must input your gross income and record your expenses separately.

Thank you for choosing TurboTax. Have a wonderful day. ~ Leslie

sheepdog2

Employee

Going through this, it doesn't appear to ask for "total mortgage payments made" to offset income. Any thoughts on where this may be in Expenses? Thx

LeslieB

Employee

Your interest is deductible as an expense, but the value of your home minus the value of your land is depreciated. This is why you do not deduct the principal. By deducting the principal and taking depreciation (if you're taking depreciation), you are overstating your deductions and a) underreporting your income and/or overstating your losses.

IRS Publication 527 states:

?Interest expense. You can deduct mortgage interest you pay on your rental property.

Types of Expenses

Listed below are the most common rental expenses.

Advertising.

Auto and travel expenses.

Cleaning and maintenance.

Commissions.

Depreciation.

Insurance.

Interest (other).

Legal and other professional fees.

Local transportation expenses.

Management fees.

Mortgage interest paid to banks, etc.

Points.

Rental payments. (this refers to items you rent for business use)

Repairs.

Taxes.

Utilities.

I would recommend you speak to a CPA or Enrolled Agent who can help you to correct your prior year returns. We have a service called CPASelect where you can work with someone one-on-one.
Link: https://turbotaxcpaselect.intuit.com/

You have two issues a) prior reporting that is incorrect and b) the impact to your net profit or loss upon the sale of your property.

I hope this helps. ~Leslie

helgy

Employee

We don't have a mortgage on our vacation rental. We don't pay any interest on our vacation rental. My rental expenses are limited to my rental income. Someone else asked the question and they were told it's because they aren't an active participant. We are an active participant so it shouldn't be limited. Our rental income was given to us in a 1099 Misc from our property management company. What do I select in Turbo Tax so my rental property expenses are't limited?

Don-F

So for ur example, the $200k restoration plus the house value portion the &200k purchase (probably about half, best to get ur county tax records & discuss with tax professional), u end up depreciating approx $300k over ~35 years. If/when you sell, you’ll need to recapture the total amount deprecated against the sale price (ie, it will decrease the cost basis, hence increase the profit subject to capital gains tax on the sale).

the upshot of this thread:

Re: Rental income is total rent minus eligible (ie, tax deductible) business expenses to manage & maintain the property. Never mind mingling in the “mortgage” payment—that just clouds the discussion!

HTH!

Wiley53

Please help by simple explanation. I pay $1800 monthly for property and renter pays me $1000 month. 12k is considered income even though it doesn't even let me break even. IRS lets me deduct mortgage interest, big deal.

How do I profit? Housing market is much lower than upon original purchase.

ColeenD3

Many landlords do not show a profit, but this is mainly due to depreciation. However, you should at least charge as much rent as covers your mortgage interest and property taxes. If you are charging what the market will allow, then that is the best you can do. If you are charging less than full rental value, you do not have a business. You would file a Not-for-profit rental.

You would enter your gross rent as income and then subtract all your expenses, including depreciation. You can take a loss against other income up to $25,000 if your income is under $100,000.