Question

rental property

Forum|Forum|6 years ago
April 24, 2020
2 replies
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if i collect 1800 per month on a rental property, but i pay a mortgage of 1250 per month on the rental property do i report the 1800 per month or the 550 profit per month. they do ask about the taxes, insurance and interest in the expenses part of the income tax form but what about the principle that i pay that is not asked anywhere on the income tax form?

A

AmeliesUncle

You report the full $1800 per month as income, then you report the expenses.

The "principal" is deducted by deprecation of the "assets". It is based on the entire cost of the home, then spread out over 27.5 years (in most cases). It usually is NOT the same amount as the principal of the loan, but for tax purposes, depreciation takes care of the principal of the home itself.

RobertG

AmeliesUncle is correct. But just to clarify;

You report the full $1,800 per month as income, and then you deduct the expenses.

You cannot deduct your mortgage payment.

You can deduct mortgage interest, property taxes, insurance, interest, and other ordinary and necessary expenses, including depreciation on the property.

You cannot deduct principal on the loan.

Loans are not reportable as income when you receive them, and are not deductible as expenses when you pay them back.

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