Mortage Interest Tax ?

elissnurse profile photo

I understand there is a limit to the amount of loss on a rental property that I can deduct on my income taxes, but how is mortgage interest treated on your rental properties?

Comments(2)

  • DaveT17th January, 2004

    For rental property, all your income and expenses are reported on Schedule E. Mortgage interest paid for your rental property is a direct expense that reduces the amount of net rental income that is taxed on a dollar-for-dollar basis.

    Let's say that after deducting all your expenses from your rental income, you have a net passive loss. Up to $25K in net passive losses can be used to offset your other ordinary income. There are income restrictions that limit the amount of net passive losses that can be used to offset active income. Any passive losses that can not be used in this tax year, are suspended and carried forward to the next year.

  • elissnurse17th January, 2004

    Thank you, that answers my question but raises another. I will start a new thread.

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