How can rent payments be tax free when paying down a mortgage?

[Nevin Rasor]

Hi, I have listened to the podcast and have heard Brandon and David talk about good debt. I am stuck on how rent from tenants could not be taxed when paying down a mortgage. I can understand how the IRS could see rent as an income and subject to tax but is possible to not be taxed? I appreciate any explanation. Thanks in advance 

[Rj Lindemann]

Hi Nevin! While I'm not a CPA, I am an investor and I'm studying accounting in college. The IRS does consider rent income. If you choose to do so, you can pay taxes on all of it. However, what most investors will do is "write off" certain expenses that they have through deductions. Just like you get deductions for dependents, charitable donations, yourself, and many other things you can also deduct expenses related to your property in order to avoid paying taxes on your rental income.

Expenses you can write off might include insurance, property taxes, the interest portion of your mortgage payment, repairs and maintenance, depreciation of your building, and any other reasonable expenses you might incur though the investment.

I hope this helps, let me know if you have any more questions!