Rental expenses in the Rental Property Profit/Loss tab
I setup a rental property with tenants and linked it to the property. This is a property that I used to live and hence managed its expenses just like regular expenses. Now that I rented it, I am classifying those expenses with a specific tag that I want to track my rental expenses. There are certain expenses that are not being shown in the Profit/Loss tab. For example, the mortgage payment (Principal, Int and Escrow) is tagged with this tag and I dont see this expense in the P/L tab. What makes a transaction to be not shown in the P/L tab? I dont enter transaction through the Add transaction feature in the Rental tab. When the transactions comes through my bank, I enter them and tag them with this specific tag.
Best Answer
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Hi again @Anil,
The principal is payment on the debt to purchase the property - that's not a deduction, but you'll get depreciation on the property instead. Similarly, the escrow payments will go into a fund to pay property taxes, and perhaps other expenses (like insurance) but you'll be able to deduct those items as well when actually paid.
Yes, the interest on the loan is deductible. And you are also correct that if any of these expenses are flagged to Schedule A - that is wrong because only personal deductions go on Schedule A. Rental property items go on Schedule E. The depreciation, likewise should be shown as a Schedule E deduction.
FrankxQuicken Home, Business & Rental Property - Windows 10-Home Version
- - - - Quicken User since 1984 - - -
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Answers
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Hi @Anil,
In general, the principal and escrow items are not considered to be expenses for both tax and accounting purposes. Instead, you will be allowed to deduct depreciation on the property, real estate taxes (when paid) and the interest paid on the mortgage loan.
Have you setup the property in Quicken, so that you can then see the depreciation expense/deduction?
FrankxQuicken Home, Business & Rental Property - Windows 10-Home Version
- - - - Quicken User since 1984 - - -
- If you find this reply helpful, please click "Helpful" (below), so others will know! Thank you. -0 -
Thanks Frank. OK, the principal and escrow are not considered as expenses. The interest I am paying I am assuming is considered an expense. Correct ? The mortgage interest is flagged as Schedule A tax line item. Is that the reason why it is not showing up in the Profit/Loss ?
And where can I see the depreciation of the property? I did setup the property in Quicken.0 -
Hi again @Anil,
The principal is payment on the debt to purchase the property - that's not a deduction, but you'll get depreciation on the property instead. Similarly, the escrow payments will go into a fund to pay property taxes, and perhaps other expenses (like insurance) but you'll be able to deduct those items as well when actually paid.
Yes, the interest on the loan is deductible. And you are also correct that if any of these expenses are flagged to Schedule A - that is wrong because only personal deductions go on Schedule A. Rental property items go on Schedule E. The depreciation, likewise should be shown as a Schedule E deduction.
FrankxQuicken Home, Business & Rental Property - Windows 10-Home Version
- - - - Quicken User since 1984 - - -
- If you find this reply helpful, please click "Helpful" (below), so others will know! Thank you. -5 -
Thanks Frank. That clears. I think what I need is a cash flow report where I can see the cash IN (rents coming in) and cash out (Expenses + Mortgage I pay to the bank that includes P+I+Escrow)0