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Old 04-20-2012, 10:00 PM
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Question Rental Income deductions

Hi, Am I allowed to deduct a portion of my property taxes and mortgage interest on Schedule E, if I rent out a trailer and space to a live-in tenant, on my private land, where my home and I also reside? What percentage? AND, how does that change how I deduct my prop. taxes and interest on my Schedule A ? Please help me!!



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Old 04-20-2012, 11:16 PM
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“Hi, Am I allowed to deduct a portion of my property taxes and mortgage interest on Schedule E, if I rent out a trailer and space to a live-in tenant, on my private land, where my home and I also reside?”--> In general, you must include in your gross income all amounts you receive as rent. For a dwelling unit that has basic living accommodations, such as sleeping space, a toilet, and cooking facilities.. Rental income is any payment you receive for the use or occupation of property. The tax deductible expenses reduce the amount of rental income that is taxed on your tax return. You will generally report such taxable income and expenses on Form 1040, Sch E. You can deduct your ordinary and necessary expenses for managing, conserving or maintaining rental property from the time you make it available for rent. If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you had two separate pieces of property. If you have personal use of a dwelling unit that you rent, you must divide your expenses between rental use and personal use. If you use a dwelling unit as a home and you rent it fewer than 15 days during the year, do not include any rental income in your gross income. Also, you can't deduct any expenses as rental expenses. However, yu still deduct pty taxes, interest expenses on Sch A as long as you itemize deductions on your return. Basically you can not deduct rental expense if you don't have rental income, in other words you can rental expense to the extent or rental income, but there is an exception, if you were actively involved in renting it (it doesn't seem like you were, based on your question) you can deduct up $25,000 losses in your tax return.
.“ What percentage? “-->It depends; if you use a dwelling unit for both rental and personal purposes, you need to divide your expenses between the rental use and the personal use based on the number of days used for each purpose. When dividing your expenses, any day that the unit is rented at a fair rental price is a day of rental use even if you used the unit for personal purposes that day. (This rule does not apply when determining whether you used the unit as a home.) Any day that the unit is available for rent but not actually rented is not a day of rental use.For example,assume that your beach cottage was available for rent from June 1 through August 31 (92 days). Your family used the cottage during the last 2 weeks in May (14 days). You were unable to find a renter for the first week in August (7 days). The person who rented the cottage for July allowed you to use it over a weekend (2 days) without any reduction in or refund of rent. The cottage was not used at all before May 17 or after August 31. The cottage was used for rental a total of 85 days (92 − 7). The days it was available for rent but not rented (7 days) are not days of rental use. The July weekend (2 days) you used it is rental use because you received a fair rental price for the weekend. You used the cottage for personal purposes for 14 days (the last 2 weeks in May).The total use of the cottage was 99 days (14 days personal use + 85 days rental use).Your rental expenses are 85/99 (86%) of the cottage expenses
“AND, how does that change how I deduct my prop. taxes and interest on my Schedule A ?”--->Yes on Sch A of 1040 . Yu can deduct it as long as you itemize deductions on Sch A.



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