Q. My daughter is at college and I want to buy a house for her to live in. If I rent out the extra bedrooms to roommates, can I still deduct my mortgage interest paid on the house?
A. You can claim the home mortgage interest deduction on your main home and a second home. However, if you rent out your second home and don’t live in it for part of the year, then it must be treated as a rental property for tax purposes.
In most cases, the expenses of renting a property—such as mortgage interest, property taxes, insurance, advertising, and maintenance—can be deducted from your rental income. This offsets and reduces your taxable income, which is a good thing!
You report income and expenses for a rental on Schedule E (Form 1040).Take a look at IRS Publication 527, Residential Rental Property for more information and a complete list of tax-deductible rental expense.
