Have a question. I do not make any profit of my rental property. What do I need to put in "enter any rental income". To me there is no income, but I might be wrong.

[maximdavidchuk]

The amount that they pay is normally the same or less than my monthly mortgage payments due to property taxes.  So, most of the time I pay out of pocket to break even.  I do not know what to put down since I do not get a profit of my property.

[view2 · Accepted solution]

Your mortgage payments cannot be used as an expense  on a residential rental property.

You can not deduct the mortgage payment;You can  deduct  the mortgage interest. You can, and should, deduct depreciation [land is not depreciated] .  If you don't the IRS will treat it as if you did.  That will have very  serious negative consequences when you sell the property.You will also have other expenses that you can claim, insurance, taxes and repairs.

Please complete the rental section (Schedule E) so that you will be able to claim all related expenses and depreciation [land is not depreciated] , so if any passive loss , that can be carried forth  even  up to the time the property is sold.However, unused losses do carry forward and can be applied to future years.  If you sell the property, any unused losses can be used to increase the basis of the property at sale.  So, you do get the losses, but they are deferred.

If you expenses exceed your rental income, you have a loss.  If the rental income exceeds your expenses, you have a profit.

Where do I enter income and expenses from a rental property?

https://ttlc.intuit.com/replies/3288530

[Carl]

All rental income and rental expenses is reported on SCH E as a part of your personal 1040 tax return. Weather you "make a profit" or not is irrelevant. You still have rental income. What that income may be used for doesn't matter.

" same or less than my monthly mortgage payments due to property taxes."

The only thing deductible on your mortgage payment is the Interest. That's it. The principle part of the mortgage payment is still taxable income to you. However, that is generally offset by other things. In fact, it is extremely rare for rental property to ever show a profit *ON PAPER* when you have a mortgage on it. It's more common for rental property to show ever increasing losses each year as time passes, with those continuously increasing and unallowed losses carried over each year.

Remember, rental income is passive, which makes rental expenses passive too. You can only deduct passive losses from passive income. So when you take depreciation into account, the total of all  your required depreciation along with property taxes, rental dwelling insurance and mortgage interst can easily put your passive rental income into the negative. Add to that other allowed rental espenses that you can claim and you're practically guaranteed to never show a taxable profit. But that does not negate your legal requirement to report it.