Income associated with a rental property

[Panthermonium]

My question is in regards to the total income compiled by Turbo Tax for rental income.  Am I correct that Turbo Tax assumes that any money paid towards the principal in a mortgage is considered income?  This seems to be the case because we show an income of ~$7000, but after you removed varied fees (taxes, insurance etc.) that profit basically disappears. If that's the case, why does the income still show a profit and likely impact our total annual income and hence tax rate?

Thanks for your assistance.

[NCperson]

Changes in principle balances is not income so the issue is elsewhere

Look at schedule C or post more details to this forum

[DC-taxpayer]

Check out this link from IRS: 

https://www.irs.gov/businesses/small-businesses-self-employed/tips-on-rental-real-estate-income-dedu...

It says that you report the rental income and you also can deduct expenses. 

"If you receive rental income from the rental of a dwelling unit, there are certain rental expenses you may deduct on your tax return. These expenses may include mortgage interest, property tax, operating expenses, depreciation, and repairs."

You report both your income and your expenses on Schedule E, Form 1040, Part I.

[Panthermonium]

Thanks for your offer of assistance.  Here's some additional specifics.

15,451 rent income

7753 mortgage (216 of that is interest)

1876 HOA

813 Prop Taxes

126 Heater Inspection

437 Insurance

507 Repairs

4078  Foreign property tax addition due to renting property as a non-resident

So total expense is 15591 (technically a net loss)

Turbo Tax shows an expense total of 8052 and a profit of 7358.  How do they arrive at the profit value?

Thanks

[NCperson]

the issue is confusion on what is an 'expense' related to the mortgage.

based on the numbers you provided, the interest is $216 and the principle paydown on the mortgage is $7537.   

The principle paydown is NOT an expense.   If you take the expenses and use $216 instead of $7753, you get the TT expense of $8052

does that help? 

lastly, can you please recheck the documentation on what is interest and what is principle.  For the interest to be that low is unusual.  Did you calculate that on your own or did you receive a 1098 form from the lender?   

[Panthermonium]

Partly.  I understand how they arrive at 8052 for expense, but how do they arrive at the profit of 7358?  I'm sure it's something obvious.

And yes, that interest amount is correct, believe it or not.  Hard for anyone in the US to believe but some mortgages in Spain have incredibly low interest rates.  

On a side note, I've received differing answers regarding whether or not property taxes on foreign rentals can be deducted.  Turbo tax inquires about the amount of taxes paid on a foreign rental, but one responder cited the new tax law as no longer accepting foreign real estate taxes as a deduction.  I can start a new thread if that is more appropriate.

https://www.irs.gov/publications/p530

Thanks for your assistance!

[NCperson]

rental income of $15451 less expenses of  $8052  = profit of $7399 ... are you sure TT has $7358? somewhere it's off just $41

[NCperson]

foreign taxes cannot be deducted

https://www.irs.gov/publications/p530#en_US_2018_publink10006475

"Foreign taxes you paid on real estate.

 You can't deduct foreign taxes you paid on real estate."

(when you click the link it will be at the VERY top of the screen - you'll miss it if you do not look carefully!)