How to File taxes on rental property income

[Tito Taiwo]

Hi! I would like some help. Last year was my mums first year being a Landlord. Now we are both trying to figure out how she properly files taxes on her rental income.

Initially I was telling her to treat it as a capital gains tax; For example she's renting her home for $2000 a month and her mortgage is $1350. She gains $650 a month based on the difference between her mortgage and the price she is collecting for rent. Therefore, for the year she would get taxed on her $7,800 gains. That was my assumptions. After being on google for a few hours It seems that rental income is taxed like regular income earned at a job and NOT as capital gains lol. 

If my mom collected $24,000 last year from rental income, she will just add that on top of her salary, and continue to file her taxes the same way? How do you file taxes from income on a rental property....Thankyou.

[Joe Splitrock]

I would recommend having a tax professional file your taxes. There are complex aspects such as depreciation that need to be understood. You can read up on all of this at the IRS website if you want to learn how to do it. At a very high level rental income and expenses are claimed on a Schedule E form supplemental to your 1040. You need to calculate depreciation on the structure. Failure to include depreciation means you lose a big tax benefit and you still have to reclaim depreciation when you sell, which means more taxes while you own and when you sell. 

https://www.irs.gov/publicatio...

Schedule E form

https://www.irs.gov/pub/irs-pd...

Schedule E form instructions

https://www.irs.gov/instructio...