David V. Fazio E.A. | Westbridge Accounting Services

The value of my rental property declined so much I owe more than it is worth. Can I deduct the decrease in value as a loss?
No. The property continues to depreciate every year based upon the original cost paid for the property. A loss on only recognized on the tax return when the property is sold or a casualty (fire, flood, earthquake, etc.) occurs.
If I lost my rental property in a foreclosure what are the tax ramifications.
There are two important issues here. First, if the bank sold the property for less money than you owed on the mortgage then you may have taxable income to report on the discharge of the debt. Second, there may be a taxable gain on the transfer of the house itself if the fair value of the property exceeded its original cost less the depreciation taken. There are complex and newly revised tax laws related to foreclosed properties. It is best to consult with Dave before and after a foreclosure.
If I receive part of the rent from Mass. Housing and the balance in cash by the tenant; can I declare only the rent reported on Form 1099?
No. Income from all sources and all forms (cash, check, credit card, barter, etc.) is reportable and taxable. Willful failure to report rental income is tax fraud and can be punishable by monetary penalties and/or jail time.
Am I allowed to depreciate the rental property even if it appreciated in value?
Yes. Depreciation MUST be claimed each year on the house (but not the land) even if no value is lost over time. The number of years the real estate is depreciated depends on whether it is commercial or residential real estate.
If I own duplex or multi-family home and use one unit for my personal residence how does this affect my reporting?
Expenses will need to be allocated as either (a) 100% deductible rental expenses [i.e. legal fees to evict a tenant]; (b) partially deductible rental expense [i.e. repairing a hot water heater used by all units]; or (c) not deductible [i.e. the cost to replace carpeting in the landlord's unit]. Carefully documenting your expenses (particularly repairs and improvements) will not only assist you during tax time but will provide valuable evidence in the event you are audited.
If my rental expenses are more than the rents I collected can I claim a loss?
Yes, in certain circumstances. If you are actively renting (or attempting to rent the property) you may qualify to deduct up to $25,000 in rental losses. There are limitations and exclusions based upon income and filing status - call or email me if you need more information.
What types of expenses can I deduct?
Most ordinary and necessary expenses to keep the property in working order are deductible. Click above on the right for my rental income and expense worksheet for a detailed list or call my office if you have additional questions.
I rented out my vacation home. Are there any special rules?
If you rented your vacation home out for less than 14 days the income is not reportable nor are the expenses deductible. If rented out longer, special tax rules apply that may limit your deductions. Call or email me if you have any questions.