TAXES – I own a home which is rented out. How can I get the biggest tax break?

Baboo: TAXES – I own a home which is rented out. How can I get the biggest tax break?
My mortgage is $ 1550 per month and taxes are $ 6500 per year. I rent the house out for $ 1375 per month at a loss every month. BUT… If I file taxes reporting the rental home as an active income generator (at a loss) I can only deduct “X” dollars for my loss (this of course would include maintenance fees, home owners insurance, HOA dues, etc.). If I just deduct the mortgage interest and taxes I get a bigger deduction.

Is it OK for me just to deduct my interest and real estate taxes and get the bigger deduction? Or do I HAVE to report it as an income generating venture even though I take money out of my pocket every month just to hold on to the house?

How would the IRS look at it? The way I see it I get penalized for owning my home and renting it out. I guess I would have to be losing alot more money every month to make it work in my favor…

Any experts out there? Thanks.

Answers and Views:

Answer by Norm
No, you have to report the rent as income.

The taxes and interest are both deductible and don’t forget you can take a depreciation deduction for the house. That will be worth several thousand dollars.

Since this is new to you it would be worth getting professional help on your return.

Answer by J M
i don’t understand why you have to charge less then your mortgage? for this year i don’t know, HR Block are set up to help you with this. that is who we went thru when we had rentals. but for the next year you might consider raising the rent or refinancing so that your payments could be lower. at the very least i always wanted to break even. so that someone else was always paying the houses off for me.

Answer by Ski_Bum
I would disagree with you that you are getting penalized for this. For you still are receiving 1375 dollars a month so there is some income and not reporting this would be tax evasion.

Answer by sunflare63
U are paying the bank for the house and getting rent that would cover some taxes for the house.
check out…..https://www.taxes.com