Rental income less than mortgage

[Vannak Kann]

Hi All,

I recently purchased an investment property in California that i rent to my parent however i charge them less than the mortgage fee. It's $100 less than the monthly mortgage. I"m wondering if that will help me when i file my tax return. The reason i charge them less because i'm helping them. WIll this effect my ability to purchase second home.?

[Wayne Brooks]

Vannak, Kurt comment was a little tongue in cheek. He' saying that when you lose $1.00, you save .30 in taxes (tax break) , therefore you still lose $.70.

But for you, tax liability equals, basically, rental income minus all operating expenses (taxes, insurance, repairs, etc), minus the interest portion of your mortgage payment (not the pricipal portion), minus depreciation, which is the price paid allotted to the building only (not the land) plus cost of capital improvements, divided by 27.5 (27.5 year life for depreciation). A CPA will be necessary to be exact.