NEED HELP ASAP - tax deduction on rental property

7 Replies

hi everyone,  

i could really use some help.   i moved abroad last july and rented out my home in CA. therefore, i was in the home for 6 months and rented out for 6 months.   i am trying to do my taxes on Turbotax right now and i am so confused about the choices in tax write offs for the rental.   when i go to enter Property Tax and Mortgage Interest on the property, do i just enter the total amout of Interest and Tax, divide that by 12 and multiply by the months i had the property rented?  the answer should be about 1/2 for both amounts since i lived in the home for 6 months and rented out for 6 months.  does that sound right?   i desperately need some advice before the deadline for taxes next week.   any advice would be greatly appreciated.  thank you so much for reading!  :-)

Send this one to your CPA. That's what he or she gets paid for. Too important not to get it right.

YES. Only cost incurred once put in service as a rental would be able to be deducted from your rental income. so if you cancelled your insurance policy and got a rebate, then started a landlord policy the whole cost of the landlord policy would be deductible. Taxes prorated based on when it back me a rental.

FYI - Turbotax has a great Ask an Expert program that you can access as a chat feature directly from the software or you can call an 800 number.  All free and part of the software.  You can ask these kinds of questions.  The service is 100% staffed by CPAs and Enrolled Agents, so you're not dealing with people just going off scripts.  They'll ask questions to understand your particular issues and then give you correct advice.

I thought you could write off mortgage interest regardless if you're renting out the house or not...

When I use TurboTax, it asks if I want to do those mid-year calculations myself or allow them to.  Try a what-if and let them do it.  They will ask when it was put 'in service' and other specific questions.  Mortgage interest is deductible either way, but int on primary only if you itemize.  If you are sitting on a large cap gain and have been in the home for 2 yrs as your primary, be sure to sell before 3 years of renting out to try and capture that wonderful tax-free gain! 

hi everyone, 

i tried answering sooner but the site blocked me from sending anything out until i answered one more piece of information on my Profile.  then, customer support took some time to answer my request and unblocked my account.  so, i am now finally free to send this reply.  i am brand new to BP and never thought about joining any of these forums.   all i can say is WOW!   the fact that all of you have answered my questions is just really great and helpful.  thank you so much for taking the time to do that and offer your advice for my situation.   sometimes, it is so nice to get a second and third opinion.  i have not done this before and living far away makes it even more challenging.  so, thanx again for the answers and helpful suggestions.  

i want to a give a special thanx to Kyle and Steve Vaughan for the extra help and advice on what to do in my situation.   not only am i new to BP, but this whole landlord thing is all quite daunting and strange too.  my tenant is doing great so far!  i do not have a property manager and there has been zero problems or requests from my tenant.  they deposit the rent on the 1st of every month and pay for all of the utilities, pool and lawn care.  so, i have not had to do much so far!  we left the house in very good shape so i do not expect any major issues anytime soon.   i will heed the advice on deciding what to do with the property within the next 11/2 year to take advantage of the capital gains.  i hear you loud and clear.  the market is really climbing where our house is located in CA.  so, i am waiting and watching the market.    i bought it at the end of the last high so there is not a ton of equity in it. :-(    thank you again everyone for your kind contribution.  keep them coming!

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here