home rental/tax question

[Guy Incognito]

I currently live in a house (mortgage) in the sticks. I am interested in moving into an apartment in a city. The housing market here sucks, so selling likely isn't an option.

My question is, if I rent out my house, and move into an apartment, will I still be able to claim my house as my primary residence for tax purposes, since I own no other property?

[mindflayer]

Where do you live? (country).

In Canada the system is totally different from the US.
In Canada, your primary residence is treated differently than a home you own and rent out.
IN Canada;
On a primary residence, your interest portion of your mortgage is NOT tax dedudtible; and when you sell your home, the Capital gains is NOT taxable. (pay now, benifit later)
If the home is rented out (you dont live there) it is an investment property. The rental income is added to your income BUT then
the interest Portion IS tax deductable and then the Capital Gains ARE taxable. (benifit now, pay later)
A lot of other things are also deductable as well.

If it is split.. (ie you own it and live there but rent out the basement etc) you can write off up to 30-35% of the hydro/gas/interest/insurance vs the rent coming in without the property being considered an investment property.
(ask your accountant on what is a safe %)

[punkass]

IF US:

I'm pretty sure since you'll be receiving income from this property (from renting the whole house), you can't deduct interest as if you were living in the house. I do believe you can deduct the interest as a business expense though. I am not certain of this, so I need confirmation on this.

[pig4bill]

The answer to the OP is: no.

[SossMan]

are you talking mortgage interest write off or captial gains?

[maxtower]

The interest is now an expense you can deduct from the income of the rent. If your mortgage interest is $1000/mon, and your rental income is $1200, you make a gain of $200/mon which you'll be taxed on.

I know what you are trying to do, and no it doesn't work like that.

[Ray Zee]

off the rent you receive you can deduct all expenses. even ones like driving to look at it and anything related to the investment. you will save much money that way. but you need to have it as your residence for 2 of the last 5 years to have its gain tax exempt. for 250 or 500 thousand.

spend the 100 bucks on a cpa and tell him what you are really trying to do and get an expert opinion on that.

[TwoOuter]

With expenses such as interest, property taxes and insurance among many others offsetting the rental income on your Schedule E, you'll most likely show a hefty paper loss which you can use to offset your taxes from other (W-2, etc.) income.

I'm with Ray-- see a CPA who specializes in rental real estate. Depreciation is a bit tricky and if you start off with the wrong numbers they'll carry over each year.