Excess Rental Expenses

Today TaxMama hears from Susan in the TaxQuips Forum, who tells us. “I have more rental expenses than income, so there’s a loss of $20,000. But I can’t use it to offset any of our income.  Can I take the property tax and the mortgage interest that were on my rental house and add it to Schedule A for itemized deductions instead?”  

Dear Susan,

That’s an interesting thought.

But I don’t think so.

This is rental property. If you can’t use the deduction this year, it does get “suspended” – and carried towards future years.In a year where you have income from that property, you will be able to use some or all of those suspended losses.

You will also be able to use the losses when you sell the property. They will be ordinary losses – which will reduce your regular income, like wages, business profits, etc.

You can read more about this in IRS Publication 527 – Residential Rental Income and Expenses.  http://www.irs.gov/publications/p527/index.html

No doubt, some of our pros will tell you about mixed-use property – asking if this rental is part of your personal residence. I still don’t really see how that would allow you to move the property taxes and interest.

Good luck!

And remember, you can find answers to all kinds of questions about rental income, losses and other tax issues, free. Where? Where else? At TaxMama.com.

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Today TaxMama hears from Susan in the TaxQuips Forum, who tells us. “I have more rental expenses than income, so there’s a loss of $20,000. But I can’t use it to offset any of our income.  Can I take the property tax and the mortgage interest that were on my rental house and add it to Schedule A for itemized deductions instead?”    http://taxmama.wpengine.com/forum/taxquips/rental-expenses/ 

Please post all Comments and Replies in the – New TaxQuips Forum

  • Ask TaxMama :: Where taxes are fun and answers are free
  • www.TaxQuips.com :: The number ONE free tax podcast online
  • IRS Publication 527 :: Residential Rental Income and Expenses.
  • TaxQuips Forum :: Where you can comment on this question
  • 2 thoughts on “Excess Rental Expenses

    1. A A "Toni" McIntyre, CPA, E. A. says:

      I’m not sure we have enough information. Was it rented at FRV? If not, then income on 1040 & expenses, up to income, on Schedule A.
      Also, is she sure she can’t use it? Some people are not aware of the $25,000 loss allowable for rental property if modified AGI is low enough & not a real estate professional.

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