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Dorothy Rosen -- The Dollar Diva Ask the Dollar Diva

Tax write-offs on a rented-out condo

Dear Dollar Diva,
I just bought a condo in Florida and will be using the on-site rental agent to rent it out during the year.
What can I write off for tax purposes?
Suzanne

Dear Suzanne,
The IRS says you can deduct all "ordinary" and "necessary" expenses related to the condo. That includes insurance, interest, taxes, commissions to your rental agent, professional fees, repairs and maintenance, utilities, depreciation and any other expenses you incur as a landlord.

At tax time, report the income and expenses related to the condo on "Form 1040, Schedule E, Supplemental Income and Loss." Download the Schedule E now, and use the expense categories listed on the form as a guide to setting up your record-keeping system.

The tax rules governing landlords can be very complicated, especially when the rental activities result in losses. For a heads-up on the issues you will have to deal with at tax time, read "IRS Publication 527, Residential Rental Property (including rental of vacation homes)."

The Diva recommends you use a tax professional to help you prepare your tax return this year. That way, you'll get all the deductions you're entitled to, and you won't have to worry about inadvertently stepping on a land mine. And you can deduct the tax professional's fees related to the condo rental on Schedule E.

-- Posted: Aug. 6, 2001

-- Posted: Aug. 6, 2001

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