Reporting income on rental property

[barb]

I started renting a property for the first time in October of this year.  I have a few questions regarding tax filing if anyone here might be able to assist.

• We replaced a few appliances (~$3,000) earlier in the year when we still lived there.  The old ones broke; it wasn't an "improvement."  I wasn't planning to report that as an expense since it wasn't a rental at that time.  Does that sound correct?
• Thus far my rent has covered my expenses each month with a few hundred dollars left over.  I've been funneling that money into repair/emergency funds for that property (haven't transferred any of it to my own checking account as "income").  Do I still report that money as income even though it's being 'reinvested' or saved for the purpose of future expenses/repairs for the property down the road?

[neo von retorch]

Not sure about #1. There might be a law preventing claiming it but I bet it's more flexible than that. Same tax year, arguably you were fixing it up for renting.

#2 When you fill out the appropriate tax form, you will probably include the date you started renting it. You'll put all rent income and all rent expenses, including depreciation, prorated for the matching time period. There's a more than decent chance you'll show a loss if you're using up almost all the rent before taking depreciation into account.

Do you pay taxes and insurance via escrow? That will likely also be prorated for the first year.

[barb]

Taxes are in escrow but I pay for insurance once yearly.

Thanks for the response. I'll look in to projected depreciation to see if that negates the extra money I'm left with.

[cchrissyy]

the mortgage interest is deductible against the income but the part of your payment that went to principle won't be.

[cchrissyy]

it sounds like you could really use this book to get oriented to the whole topic
https://store.nolo.com/products/every-landlords-tax-deduction-guide-dell.html