Real Estate Tax / Rental Questions


N

Norm

Scenario. Military family received three year orders. They move but
keep their home. In their new location they are renting a home.
The family plans to return after three years - either through military
reassignment or if necessary, retirement. Their home is being rented
out during their absence. Due to expenses (mortgage and taxes) there
is no chance they will ever show a rental profit in the next three
years (or the next five years for that matter). Their combined
income is in excess of $150K so the passive losses can only be carried
forward.

Questions:
1) Can they treat the rental as not-for-profit and take the mortgage
and real estate tax deductions on schedule A? (As noted above, these
expenses are in excess of the rent they receive.)
2) Could they claim real estate taxes on Schedule A and omit them
from Schedule E? The wording for mortgage expenses is clear
(principle residence) but the wording for real estate taxes is a bit
different.

I'm looking for any help from someone who may have dealt with a
similar situation.
 
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