rental homes tax deductions

Mar 08, 2005 1 Replies

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I would appreciate any clarifications.

I bought 2 homes in a different state, planning to rent for a profit, I also hired the agent to manage and put them out for rent for months but could not rent, so I sold them before the year end. My questions:

1) Should I treat them as vacation home or rental home ( even though I did not rent for a day )? The homes are empty all the time.
2) What are the major differences between vacation/rental homes in terms of tax deductions ?
3) Can I deduct property tax, mortage, purchasing/selling fees, insurance premium, fix-ups, utilities ? Is there a limit on the deductions ?
4) Which Schedule/Forms should I use ?
5) Do I claims each house separately or can combine the numbers together ? Thanks much!

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They're rental properties from the time they are put up and available for rent.

Vacation homes: Property taxes are deductible. Interest using your main home and one other home as collateral are deductible. Repairs have no tax consequences. Improvements are capitalized.

Rental property: All taxes are deductible. Interest USED on the prpoerty is deductible. Repairs are deductible. Improvements (and the value of the home) are depreciated.

Purchase/sale fees are adjustments to basis or the selling price, in either case. For rental property, deductions in excess of income may be suspended. For a vacation home with incidental rental, deductions in excess of income are lost.

Schedule E.

Separate columns on Schedule E. They get combined, later.

You probably do need a professional this year. However, I'm almost certain the properties are rental properties.

rental homes tax deductions

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