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Why does the amount of taxes I owe go up when I enter repair or mortgage interest on my rental? If I enter zero repairs I owe less, the inverse if I enter expenses

My total estimated Federal Taxes Due goes up when I enter rental expenses such as repairs or mortgage interest paid.  If I enter zero repair costs, my amount due actually goes down . . . this makes no sense.
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HelenC12
Expert Alumni

Why does the amount of taxes I owe go up when I enter repair or mortgage interest on my rental? If I enter zero repairs I owe less, the inverse if I enter expenses

One possible reason is that some income-based credits such as the earned income credit will decrease when you enter more rental expenses and decrease your taxable income.

  • Please note that the law requires you to deduct all allowable expenses and not leave out some to increase your income-based credits. Source: MinhT1

Another area that is affected by the amount of income on your rental property is the Qualified Business Income Deduction (QBI). The Qualified Business Income Deduction takes the qualified income and multiplies the amount by 30%. 

  • As your Rental Income decreases with the additional expenses, the QBI is decreased. As the QBI is decreased your taxable income and income tax amount will increase. The greater the taxes the lower the refund. Source: KurtL1
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