I have a question about reporting loss on rental property. If I rented out my home for less than my mortgage payment, do I have to report the rental income?
Yes, you must claim the income even if you are reporting loss on rental property. The payment is a rent payment.
If the payment is for the fair rental value of the property:
- Report the income on Schedule E.
- Deduct these items on Schedule E to the extent of your rental income:
- Mortgage interest
- Real estate taxes
- Other rental expenses
If reporting loss on rental property, it might be limited by the at-risk rules and passive-loss limits. However, a special allowance exists for the passive-loss limits.
If the monthly rent payment is less than the fair rental value of the property, you’re not renting for a profit and all of these apply:
- You must enter the rental income on Form 1040, Line 21.
- If the rental home is a first or second home, you can fully deduct the mortgage interest and real estate taxes on Schedule A.
- You’ll deduct other rental expenses on Schedule A as miscellaneous deductions subject to 2% adjusted gross income (AGI) limitations. (Ex: rental operating expenses and depreciation) However, you can’t:
- Deduct those expenses that are more than rental income
- Carry over unclaimed expenses to the next year
Learn more about second home tax deductions and taxes on selling a second home with the tax experts at H&R Block.
If your business had no income this year should you still file a tax return? Learn more from the tax experts at H&R Block.
Need extra cash? H&R Block is here to help with a list of some of the best temporary jobs for making money on the side.
What is the process for reporting winnings from online gambling? Learn more from the tax experts at H&R Block