What ramifications are there on purchasing a property to rent out privately and putting that rent money in a savings account? Would I as the owner be liable to pay tax on the income from the rent?
Thank you.
Sun Oct 21, 2012 3:06 pm
Publius Preferred Member
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Yes, rental income is income, though you would treat it more like income from a small business than a paycheck (income - expenses - depreciation of assets etc.). It is filed with your taxes on Schedule E on form 1040.
Sun Oct 21, 2012 4:32 pm
clydewolf Senior Member
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Re: A Theoretical Question
quote:Originally posted by floinksy Hello
What ramifications are there on purchasing a property to rent out privately and putting that rent money in a savings account? Would I as the owner be liable to pay tax on the income from the rent?
Publius has properly pointed you to Schedule E.
As the landlord, you receive rent from your tenet. Then you start subtracting expenses for the rental property, things like repairs, taxes, insurance, legal fees, mortgage interest, Schedule E has the list. http://www.irs.gov/pub/irs-pdf/f1040se.pdf
One big item is depreciation you take on the rental buildings as an expense. The property does not get depreciated. You do want to take the annual depreciation because when you sell the property, your adjusted basis must include the depreciation you have taken or could have taken.
It is doubtful you would have any profit to declare on your 1040.
