Dumb question...I'm a newbie, please forgive...
If I get 1100 a month in rent but I pay 900 in mortgage payments. Do I report my rental income as 2400 a year? or 13,200?
@Terry N. , welcome to BP. There are several ways you can report rental income. I have used Schedule C but currently use Schedule E. I am not an accountant so will only give basic info here to get you a quick answer. (I suspect your post will attract other answers from more qualified people.) On either schedule you report the income received ($1,320) and then deduct the expenses. The interest portion of the mortgage loan payment is an expense. (The principal repayment portion is not an expense. The money taken out in a loan is not taxable and the repayment of that loan is not deductible.) All other expenses related to the rental property including taxes, insurance, repairs, utilities, etc...are also deductions against the rental income received. A tax adviser or accountant can be a valuable part of your team and should be consulted for an answer specific to your situation.
You are required to report the gross rental income you collect (in this case 13,200 - assuming you actually collect it all). You then can deduct your allowable expenses from that, which would include mortgage interest paid but NOT principal payback. So your entire mortgage payment would not be deductible.
Got it...thanks much!
Kyle and Jeff got it spot on as far as reporting the gross rental income and being able to deduct the expense you've incurred with said rental throughout the year.
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