Asked by Martha  |  Submitted November 05, 2013

What are the tax breaks I’ll lose if I rent out my house instead of living there myself?

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  Answers  |  2

September 15, 2014

Good question. You may actually gain tax benefits by renting out a home. You can deduct some of the same expenses on a rental property as you do now: property taxes and mortgage interest. You also take deductions for insurance costs, maintenance, property management fees (if you pay someone else) and depreciation - depreciation is a non-cash expense which means you get a tax deduction without having to put out additional funds. Essentially your house moves from Schedule A of your tax return to Schedule E: allowable deductions for a rental property are taken against rental income received. Assuming you end up "even" - i.e., rents and deductions are a wash, you pay no additional income taxes on the rents. And the best thing about rental properties? O.P.M. - Other People's Money is being used to pay for your property! The rules regarding rentals are not for do-it-yourselfers when it comes to your tax return - hire a CPA to take care of your tax return. Good luck!

$commenter.renderDisplayableName() | 01.27.21 @ 01:51


September 18, 2014

This is a good explanation. However, be aware that renting out a home in Indiana will cause the owner to forfeit the $45,000 Homestead Deduction, which may double your property taxes. However, the new, higher property taxes are still deductible on Schedule E. I am a property manager and this has happened to several of my homes.

$commenter.renderDisplayableName() | 01.27.21 @ 01:51