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Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
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In your rental scenario, you are not operating with a profit motive - you're operating to offset your monthly expenses
You will claim the rent as income, but you can deduct any expense related to that rental - the portion of your insurance that is attributable to the rental, the portion of the utilities that is attributable to the rental, any repairs attributable to the rental
Hi, I am renting out two spare rooms to help pay for the mortgage, is that what you mean?
Plus, depreciation on the part of your house that is rented out.
However, you can only deduct up to the amount of your rent.
and the mortgage interest?
Yes, that is what I mean - in response to your response
Yes, but you will probably be deducting the mortgage interest anyways on your house
you mean I will already be deducting mortgage interest from my annual income, regardless of the rentors, so what is left to offset against the rent are these other expenses?
yes, those other expenses - insurance, repairs, depreciation, utilities, etc
but, you can only deduct expenses up to the amount of your rent
and so all of the escrow payments would be included in that?
Yes, that is correct
if I was going to but another rental is it easier to do this through a company structure then?
No you will not do this through a company structure. It will make your tax reporting more complex, and this isn't a business
Oh...if you buy another rental. I'm sorry
Yes, if you buy another rental - you don't have to have a company structure. You can report the income and expenses on schedule E of your tax return
ok, thank you