I have a rental home that is not creating income. I am actually taking a loss because what I pay for loan, interest , and taxes is more than what I collect from renters. Can this be filed as a loss?

reyesochoa — Thu, 06 Jun 2019 09:56:25 GMT

Yes. As long as the rental home was available for renting...

DS30 — Thu, 06 Jun 2019 09:56:26 GMT

Yes. As long as the rental home was available for renting (whether or not it was actually rented) and was not used for personal use during the tax year, you will be able to claim some of the rental expenses on your tax return if you actively participant in the rental activities of the property.

To enter your rental income and expense in TurboTax, log into your tax return and type "rental (schedule e)" in the search bar then select "jump to rental (schedule e)", TurboTax will guide you in entering this information

Related to Rental Participation -

Please note that if you are an active participant in your rental activities (you do your rental activities (ie: collect the rent) as opposed to a management company doing all these activities), the IRS allows for $25,000 of passive rental losses to become available each year to offset ordinary income. This offset may not pertain to claiming a loss related to home office expenses which are limited to rental income only

In order to be able to deduct passive rental losses against ordinary income, you will need to be an active participant in your rental activities (screenshot #1) and your investment in your rental property needs to be considered "at-risk" (At-risk limitation rules limit any deductions to the amount of money that the taxpayer actually had at-risk at the end of the tax year).

The ability to use this $25,000 of passive rental losses is phased out at a certain income level. The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all times during the year) is reduced by 50% of the amount of your modified adjusted gross income (MAGI) that is more than $100,000 ($50,000 if you are married filing separately). If your modified adjusted gross income is $150,000 or more ($75,000 or more if you are married filing separately), you generally cannot use the special allowance. (See screenshot #2 for how to calculate your MAGI)

Related to mortgage payments -

Unfortunately, you will not be able to claim your entire mortgage payment as a rental expense. Only the mortgage interest, mortgage insurance and property taxes related to the rental property are deductible.

The principal that you pay with your mortgage payments is your investment in the property and is considered nondeductible by the IRS. However, you are able to claim a depreciation expense related to the rental property that will increase your rental expenses. You will need to add the rental house as an asset under this section (See Screenshot #3).

topic I have a rental home that is not creating income. I am actually taking a loss because what I pay for loan, interest , and taxes is more than what I collect from renters. Can this be filed as a loss? in Investors & landlords

I have a rental home that is not creating income. I am actually taking a loss because what I pay for loan, interest , and taxes is more than what I collect from renters. Can this be filed as a loss?

Yes. As long as the rental home was available for renting...