Question by Ann W: Tax impact of renting a home at a loss?
I own a condo in Nevada that I lived in for about a year while working there, but moved to a different state a few months ago for job-related reasons. I had the condo listed for sale, but no takers. Someone made the suggestion of renting out through a property management company. I checked with a few, and the consensus on the going rental rate would still be less than the mortgage I currently pay on the property.

This may be a stupid question, but what is the tax impact of renting out this property? I know you can deduct mortgage interest, but what about the mortgage itself? If I have to report the rental income, but cannot deduct the mortgage I pay, does this mean I am paying taxes on a “profit” that doesn’t really exist? Or is the mortgage itself deductible?

Thank you,

Best answer:

Answer by bull_rooster_aardvark
You can only deduct the interest portion of the mortgage payment but if you’ve only had the place a year or so, I’ll bet 95% of the mortgage payment is interest (assuming a 30 year loan term). You can also deduct all other expenses, but not the portion of the mortgage payment that goes to pay down the mortgage balance (this is repayment of a debt – not an expense)

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