topic If I have rental property income but the income doesn't cover my monthly mortgage payment can the loss be claimed as a capitol loss? in Investors & landlords

If I have rental property income but the income doesn't cover my monthly mortgage payment can the loss be claimed as a capitol loss?

denisem252000 — Mon, 09 Mar 2026 08:36:29 GMT

Re: If I have rental property income but the income doesn't cover my monthly mortgage payment can the loss be claimed as a capitol loss?

DoninGA — Wed, 09 Mar 2022 19:44:15 GMT

No. You only have less income to report on the Schedule E for the rental property income.

Re: If I have rental property income but the income doesn't cover my monthly mortgage payment can the loss be claimed as a capitol loss?

Mike9241 — Wed, 09 Mar 2022 19:56:25 GMT

the portion of the mortgage payment that is for principal is not deductible.

the loss is not capital and may be subject to passive loss limitations. report income expenses on schedule E

Re: If I have rental property income but the income doesn't cover my monthly mortgage payment can the loss be claimed as a capitol loss?

Carl — Wed, 09 Mar 2022 21:11:46 GMT

WHen it comes to long term residential rental real estate, it's common for that to show a loss every single year, on paper come tax time. Especially if you have a mortgage on the property. When you add up the deductible expenses of mortgage interest, property taxes and property insurance along with the depreciation you are required to take by law, that will quite commonly exceed the total rental income received for the tax year. Add to that the other deductible expenses for rental property such as repairs and maintenance, and you're practically guaranteed to show a loss on line 26 of the SCH E.

Rental income is passive. You can only deduct passive losses from the passive income. When those passive losses exceed the passive income, a maximum of $25K can be deducted from other ordinary income, provided of course you have the "other" income to deduct it from. Then anything over that just gets carried forward to the next year.

It is not all that uncommon for passive losses to grow with each passing year. You can't actually realize those excess losses until the tax year you sell the property.

So until you sell the property, it's no big deal for your SCH E line 26 to show a loss each and every year the property is classified as a rental.