YARWHLOOS: Renting out a house and taxes? Multiple homes and taxes?

Thor Simpson · 04-09-08, 12:30 PM

When me move to Cali in a couple months, we are going to hold on to our Colorado home and rent it out. We will be renting in CA, not purchasing another home.

1) I know you can deduct interest on up to two homes... I assume that also means that we can still deduct our Colorado mortgage interest even if we are renting in CA?

2) If someone has three or more homes with a mortgage, do you get to choose which ones you deduct the interest on? Is it primary plus one? Do rentals affect this?

Thanks!

VinVega · 04-09-08, 12:43 PM

For a second I thought this was a thread about the battle Napoleon lost.

Jeraden · 04-09-08, 01:17 PM

You can't itemize the mortgage on your Colorado home anymore since its not being used for personal use at all. You'd report the income as rental income and you can offset that income with the mortgage interest.
There are considerations as far as partial personal use - but in your case its now solely being used for rent and you aren't occupying it anymore. I'm not sure if you'd divide it up over the whole year (itemize 6 months of the interest for personal use up until you move, and use the other 6 months of mortgage interest to offset the 6 months of rent), or if thats handled within the rental income schedule.

I go through this scenario now because I rent a condo I purchased to my dad. He pays me rent, so I have to report that as income and offset it with the mortgage interest.

The Bus · 04-09-08, 03:18 PM

Quote:

Originally Posted by Jeraden

You can't itemize the mortgage on your Colorado home anymore since its not being used for personal use at all. You'd report the income as rental income and you can offset that income with the mortgage interest.

And a whole lot of other stuff. Rentals, on paper, should be deep, deep income losers.

Speak with your tax professional.

Thor Simpson · 04-09-08, 10:30 PM

That sucks.

04-09-08, 12:30 PM	#1
Thor Simpson DVD Talk Hero Join Date: Apr 1999 Location: Seattle, WA Posts: 35,014	YARWHLOOS: Renting out a house and taxes? Multiple homes and taxes? When me move to Cali in a couple months, we are going to hold on to our Colorado home and rent it out. We will be renting in CA, not purchasing another home. 1) I know you can deduct interest on up to two homes... I assume that also means that we can still deduct our Colorado mortgage interest even if we are renting in CA? 2) If someone has three or more homes with a mortgage, do you get to choose which ones you deduct the interest on? Is it primary plus one? Do rentals affect this? Thanks! __________________ I'm not a fan of people quoting others and saying "This," but... This. - VinVega

04-09-08, 12:43 PM	#2
VinVega Moderator Join Date: Nov 2000 Location: Stuck in the middle with you Posts: 24,056	Re: YARWHLOOS For a second I thought this was a thread about the battle Napoleon lost. __________________ History is the witness that testifies to the passing of time; it illumines reality, vitalizes memory, provides guidance in daily life and brings us tidings of antiquity. - Cicero

04-09-08, 10:30 PM	#5
Thor Simpson DVD Talk Hero Join Date: Apr 1999 Location: Seattle, WA Posts: 35,014	That sucks. __________________ I'm not a fan of people quoting others and saying "This," but... This. - VinVega

04-09-08, 01:17 PM	#3
Jeraden DVD Talk Special Edition Join Date: Oct 1999 Location: Pittsburgh, PA Posts: 1,920	You can't itemize the mortgage on your Colorado home anymore since its not being used for personal use at all. You'd report the income as rental income and you can offset that income with the mortgage interest. There are considerations as far as partial personal use - but in your case its now solely being used for rent and you aren't occupying it anymore. I'm not sure if you'd divide it up over the whole year (itemize 6 months of the interest for personal use up until you move, and use the other 6 months of mortgage interest to offset the 6 months of rent), or if thats handled within the rental income schedule. I go through this scenario now because I rent a condo I purchased to my dad. He pays me rent, so I have to report that as income and offset it with the mortgage interest.