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Loss of rental income deductible on taxes?
I have always been told loss of rent cannot be considered on your taxes. I want to do things right this time and maximize my return. Can I inlcude loss of rent on my taxes. We itemize everything and own two houses. One we live in, one we rent and have not recevied rent from 1 of the units since 02/08. (too long to list why).
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We have rental propery also & suffered similar situations over the years. This is how we handle it:
You must report all income from rental properties. This is income & Uncle Sam does not care how you got it but he does want his share of it. We show all rental properties (rented or not). We show the total income from all property as a whole. Then we show expenses spent on those properties. You can even take vehicle expense required to visit, inspect, maintain or collect rent from those properties. The real estate taxes & insurance are deductible. There are a lot of expenses you are actually incurring that you you never really think about but when added up it really surprises you. We take a loss on our rentals every year as far as IRS is concerned. Here is the neat thing about owning rental property. Obviously, you must have receipts for everything in case you might get audited ny the IRS. Those receipts say nothing about where it was used. Save ALL receipts all year long. When reporting taxes, use those receipts to show expenses on the rental property. The receipt does not show that you replaced the door on your home or the rental home. It simply proves expense. Using that method (with a little bit of common sense), you can place much of your home expenses on the rental property. |
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What bones 252100 is suggesting (transferring household expenses to your rental house) is ILLEGAL and, if discovered, CAN be considered tax fraud!
People can go to jail for that! And you would be surprised how EASY it is to discover that kind of gerrymandering of receipts! I do it all the time when I question my clients about questionable expenses! If done properly, rental property can generate sufficient paper losses that transferring the costs from your house will NOT be needed. The principal reason for the paper loss is the depreciation on the rental property. BOTTOM LINE: Do it right and do it legal! If you do not know how, get professional tax help! |
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