What I am thinking is
1) My mortgage interest on my home in Boston, I deduct it as part of itemized deduction. Treat rental income I receive on the property in Boston as income , deduct depreciation as an expense from that income. Is there any way I can deduct my rent paid in DC also as part of the expense?

My rental income for the home is 3000$ and I pay the same in rent in DC. The home mortgage is today at 520,000

regards
John

Sadly there isn’t enough information to say. It depends on your marginal tax rate, the amounts of your other SCH A deductions, whether you are affected by AMT … etc.

As my engineering economy professor once said “least cost is almost always the right answer”.

So i presume you are saying too that 100% of mortgage interest can be claimed as an expense.
Do i take the exchange rate on each date the mortgage is paid and get an average of them or pick the lowest/highest (or most favorable conversion)?

If you are a US citizen you must report your world wide income. so there is no difference you just have to convert to USD. You may choose to elect 40 year not required. But if you started with 40 year must continue.

With regards the mortgage interest deduction on sch A, would this property not be a “qualified home” and therefore the sch A deduction would not be possible but the expense on sch E is?

Any other implications to consider for a foreign rental property

Thanks.

The Sch E is a simple income statement. Rent is the income. Depreciation, HOA dues, Mortgage interest, supplies, cleaning and maintenance, management fees etc are expenses, don’t forget mileage to meet with renters or RE agents or management agents. If the rent is more than the expense there is a gain if not a loss.

Most condo’s have HOA’s (home owner association) fees. In a rental situation would these costs be captured as additional expenses in a schedule E?

$1,000 rent
$500 interest
$200 principle
$200 HOA

Thoughts?

We recently purchased a new home, and put our condo on the market. After 3 months with only 2 poor showings, we listed it for rent, and it was rented within a week.

The rent we are collecting would cover the cost of the mortgage if it were not for the 1 month + $75/mo fee we have to pay to the management company that collects rent and maintains the property.

I understand that we will be able to write off the mortgage interest for our new home, but I am confused as to handle the condo. For the first 6 months of the year, it was our primary (and sole) residence, so that will be mortgage interest.

I understand that the day we listed it for sale/rent it became a rental property, so I can begin depreciation starting when it was advertised, so I will be able to claim 1/2 a year of depreciation on the asset.
Here’s my question: if we are getting ~1000/mo in rent, but 500 is going to interest, does that mean I can write off 500 of the rent, but the remaining 500 will be counted as rental income? In this scenario, how would it look like a loss when reported?

Thanks

Ask yourself… if you owned this $180,000 cabin outright would you go out and get a 10 year fixed 3.5% loan because the rates are great and you’d get a tax deduction? You’ll wind up paying the bank thousands of dollars in interest just to get a tax break.

I’m upside down on my mortgage and my partner is no longer helping me with the mortgage so I’m thinking of renting out my house and renting an apartment for myself. I’m trying to avoid a short sale or foreclosure.

I can’t get enough rent to cover my mortgage, so I wanted to know if I can deduct the mortgage interest, which would make if easier for me to charge less rent.

It does not matter what is securing the loan, if you could do it, it could be an unsecured loan (good luck with that nowadays). If the loan proceeds were used to buy the rental house the interest is an expense on SCH E.

“If you borrow money to buy rental property that interest is an expense to be taken against rental income it does not matter if it is secured or not.”

Question: what if the money you borrow to buy rental property is secured by your primary residence?

If you borrow money to buy rental property that interest is an expense to be taken against rental income it does not matter if it is secured or not.

I am a professional tax preparer.

Am I better
1) Paying cash for the cabin
2) Borrowing at these great rates

also,
Is there a benefit for me renting this out over a few ski weekends in the winter? I don’t need the money, but does this allow me to deduct some additional expenses?

I owned two homes in 2010:
Home “A” = lived in this home from Jan thru mid-Nov. Put up for sale in mid-Nov and sold in 2011.
Home “B” = rented this home out all of 2009 as well as Jan thru May 2010. This home sat empty from June thru mid Nov 2010. In mid Nov 2010, I moved out of Home “A” and into Home “B”.

I carried a passive loss over from 2009 to 2010. For 2010, I have additional passive losses for the five mths the home was a rental.

I am confused regarding two things at this point:
1. I treated the rental property as passive b/c I thought that you had to be a real estate professional in order to consider the income to be non-passive. I just read on this blog that if you check on the property or collect a rent check, you can go w/ non-passive so am now wondering if I should have considered non-passive in 2009 and 2010.
2. I read on the net that in the year you cease the passive income, you can take the passive loss carryovers against regular income. Wondering if anyone can confirm this. If this is true, then it won’t matter that I treated as passive activity since I’ll get to take all of the loss in 2010.

Thanks!

Here are the rules, you can deduct all real estate taxes, you can deduct mortgage interest on two homes (but only the interest on the first $1,000,000) Now if you convert one house to rental for profit you report all the rent as gross income and all the expense (including depreciation) you do this on a Sch E.

This is the real boiled down version.

Thanks,
John

The interest on the portion you live in … well it depends. If you have enough you can deduct it. Remember you get a standard deduction you must have more than that standard deduction to help you save on your tax.

Now the cool thing is the rebate being offered until the end of November, up to $8,000 for first time home buyers there are limits due to income. Remember November not the end of the year.