Renting primary residence

johntax · #1 (**permalink**) 07-18-2009, 01:10 PM

Tax Guru
Are there mortgage considerations when renting a primary residence? We have lived in the home for 2-years and are moving states for work, but selling was not in our best interest at this time..

Thanks

TaxGuru · #2 (**permalink**) 07-19-2009, 01:08 AM

The Primary residence is now rented out and would therefore be considered a Rental Property. The Rental income would be reported on Schedule E along with the property taxes and mortgage that were incurred during the period the property was rented out.

Thus, property taxes and mortgage interest incurred up to the period that you phyiscally resided in the property would be deducted on Schedule A. Thereafter, when you converted this property into a Rental property, these deductions of property taxes and mortgage interest (that were applicable after the you converted the property into a rental property) would be deducted against the rental income received from renting out your home.

Now, you are entitled to deduct a portion (reflecting the period the property was converted as a rental property) of the property insurance, repairs, painting, gardening expenses, commissions paid to real estate company that is taking care of your property in your absence.

johntax · #3 (**permalink**) 07-19-2009, 12:39 PM

Great thanks.. one last question, does the loan need to modified with the mortgage co?

TaxGuru · #4 (**permalink**) 07-19-2009, 04:23 PM

Not at all, especially if you have a great interest rate, I don't think you should initiate the change with them. But you could always attempt to refinance if you have been stuck with a much higher interest rate.

It is best that you contact a Mortgage Loan Consultant to determine if you can save monies on refinancing your existing interest rate on your home loan.