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?

[LeslieB · Accepted solution]

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

[sheepdog2]

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]

You will be asked to input your mortgage interest.  You do not get a deduction for the principal payment of your mortgage.  This is because you are able to depreciate the property based upon its value instead.

[tclemens]

So the principal mortgage payment is subtracted from the rent payment received each month to come up with "rental income"?

[LeslieB]

Actually only the mortgage interest is deductible. When you input your income and all of your expenses, the software transfers this information to Schedule E and it will display both your total income (sales) and your list of expenses for each property.  Your net profit will be shown at the bottom of the form.

[tclemens]

What if I have been calculating my rental income the way I described for years even when I went to HR Block in the past?

[andre021]

I have the same question. If I receive 950 in rent, but my mortgage payment is 714 can I in put  950-714= 236 Monthly income , so it would be 2,832 Income for the the entire year instead of 11,400

[LeslieB]

This is a common mistake, however rental income is "not" total rent minus mortgage payment.  You must input your gross income and record your expenses separately.

[tinamarie]

I'm thoroughly confused. I rent my house out for 1100/month. We pay 1378/month in our mortgage payment. We are losing money every month. Now I input what I received, and it's saying I'm going to owe a hefty amount because of it. This isn't an INCOME for me... it's a loss. I'm not receiving 1100... I'm losing 278. So, on top of that, I'm going to have to pay taxes on this non-income?

[LeslieB]

TinaMarie, Could you start a new post with this question?  I will follow your question and respond.
Copy the link to your question here.

[avoruzo]

I'm almost in the same boat as tinamarie. Why there is no option on how much you pay for mortgage?

[susan-artero]

Hello, I have found that when I enter my 'gross=total' rental income in Turbo Tax, and do not enter the mortgage pymts for that rental property, it pushed us into a different tax bracket, but we never made much profit on the house, we took home (net) only a couple thousand but it shows well over and never does Turbo Tax ask me for the mortgage Payments- only mortgage interest in the 'expense' portion.  The worse part of including total (gross) rental income is that now we are also being charge an AMT- alternative Mininum tax.  I think it is because my total "Take HOME" income (AGI) appears high, when in fact, it's not.  I was also told that I couldn't receive a lot of tax benefits or deduct all my expenses because my "Income level is too high" My REAL take home income level is not as high as it appears if i'm able to include my monthly mortgage on the rental property-  I need help- PLEASE!

[joel1]

Tinamarie (and others), the reason that only interest + expenses can be deducted is that your home is an asset and your mortgage is basically a form of mandatory "cash account" against your asset that turns asset value into cash that must be repaid on fixed intervals.  So when you pay your mortgage, you are effectively transferring money from your bank account to your "House account" which are both assets.  When you sell the house, you can then receive the value of the money transferred to the house account in the form of cash.  The house account is not an expense.

However, the money you pay in interest IS an expense because it's money being transferred to the bank that you'll never see again.  Therefore, it can be written off.

[usg466g1]

This is something I never knew as well. I don't claim  any depreciation because I'm not entirely sure how that would work out. We paid 200 K for the home then put another 200 K into restoration and only recently began renting it .  So the purchase price would not be something I would ever want to depreciate against as we put so much into restoration .  This is a shocking law because so many people have a mortgage on their business property. To me it should be considered like any other business if you have debt that's considered an expense but I know you don't make the rules . Additionally,  The mortgage payment we carry is actually a home equity line of credit meaning that every dollar owed is actually money that went into restoration of the property prior to renting it out so in a fact it truly is a business expense !