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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
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Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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Offsetting Rental property income against rental payout

Customer Question

If we rent out our single family house in Michigan for $3200 (on which we currently pay mortgage), and then rent an apartment in Massachussetts for $3200, then do we need to pay federal income tax on our Michigan rental income? Is the Massachussetts rent we pay tax deductible in this scenario? Or, Is there any other way to offset these against each other, for instance if a property management company does the exchange for us, so that we neither receive nor pay any rent?
Submitted: 11 years ago.
Category: Tax
Expert:  Jon Andrews replied 11 years ago.

The "NET" rental income from the house in MI will be taxable income or dedcutible loss.


You will not get any federal tax benefit from the rental expense in MA whether you use a management companyor not - rent payments are not deductible for federal income tax purposes.


NET rental income is gross rents minus mortgage interest, property taxes, property insurance, repairs, maintenance, depreciation, and other allowable expenses. 


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