FHA Property Tax advise
Hello,
Around end of August I bought a townhouse type property with an FHA loan (so I live in it too) and started renting out the rooms. (So I live in it too) While filing my tax returns, however, I ran into a few issues. I understand i need to report the income and figure out the expenses by using the square feet of the rooms. Both rooms rent for a total of $1100 and my mortgage is around $800. I just finished filling out my taxes and it said I owe about $700 for federal and state taxes. Is it supposed to be that high? This is after mortgage interest and depreciation and expenses were accounted for. Did I do something wrong.? Thanks in advance.
Most Popular Reply
Don't know the whole picture...
However, you have to remember that the net income you earned from renting the room doesn't have income tax withheld during the year. So, when you go to file taxes, if you don't have enough deductions, you'll have to pay fed/state/etc. on that income.