CPA Tax Help?
If I owned a rental property appraised at 100K, rented it for $900 a month, loan payment was $400 a month, insurance and other expenses were $250 a month, and I my household income (without rental income) is 50K, what would I be looking at in taxes each year (including depreciating the house)?
The only tax deductions I have are my house taxes $1400 a year and my two kids.
Can anyone help me figure this out?
the amount of the appraisal and the amount of the loan payment dont matter. what does matter is how much of the loan payment is interest and what your basis is in the property (what you paid for it). Get a 1040 long form - there is a schedule in the package that steps you through the calculation - has columns for 3 houses. subtract your interest and other expenses from the rent and that is your income before depreciation. you have some choices re depreciation - look at the form. what is left is taxable.
Download Schedule E from the IRS website at http://www.irs.ustreas.gov/
Any net income from your rental activities is taxed as ordinary income at your marginal tax bracket. If you are in the 25% tax bracket, and you have $6000 in net rental income (after depreciation), then expect to add $1500 to your current tax liability.