Questions as a first time landlord

[Joshua Loh]

Hi guys, have a couple of questions as a first time landlord.

1) Do I need to pay taxes on my rental income? How do I report it? How does the IRS know how much I am renting my property out for?

2) Can you rent out your primary residence?

Thanks.

[David M.]

@Joshua Loh

Rentals are reported on SchE to the IRS.  If you download the form, you can see the various categories of deductions.  So, your rent minuses your expenses including the interest part of your mortgage payment, insurance, depreciation, etc.

As mentioned, usually the depreciation will wipe out your income.  Or, maybe not because of your market. That's many investors talk about "cash flow" since depreciation is a non-cash deduction.  So, if your rental "look" negative, you may not be able to take the deductions on your 1040 since these are passive losses (..Google...).  These passives losses are carried forwarded.

You can rent out your primary residence, but that does make your taxes more complicated since it will be both a residence and a rental.  So, many of your expenses will need to be categorized/pro-rated for tax purposes.

Good luck.