AmyC
Expert Alumni

Investors & landlords

@brentAaron You deduct the mortgage interest on sch E that correlates to the rental property. You have paperwork showing the mortgage partially went to the rental. That portion is legitimate sch E interest. You must keep that paperwork showing the payment in your financial notebook, to have if you are ever asked about it.

 

I want to urge you to create a financial notebook that is kept separate from your tax return. Keep it safe and each year, add your year-end statements from all your financial accounts plus a copy of your W2’s, your schedule E  information, and proof of your basis in your various investments. You must keep tax records related to a rental house from the time you purchase until you sell plus 3 years. It is very easy to lose track of disallowed losses, mortgage paperwork, etc. Keeping it all together simplifies things.

 

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