DEAR BOB: I know a person who owns his home and owns another residence he rents to his daughter. But he insists the money he gets from his daughter is not rental income. He says it's just enough to pay the mortgage so he doesn't report it on his IRS tax return. But he claims the property taxes and mortgage interest on his personal tax return, Schedule A. Is this correct? --Jose C. DEAR JOSE: No. Your friend should be reporting the rental income on Schedule E of his federal income tax return. This is the same place he can deduct the applicable mortgage interest, property taxes, insurance, repairs, other expenses and depreciation for the rental house. Purchase Bob Bruss reports online. He probably thinks he is cheating the IRS. But he is really cheating himself because he isn't claiming the maximum tax benefits from his rental property. If he has less than $100,000 annual adjusted gross income, he can deduct up to $25,000 tax loss from his rental property, thus reducing his income tax...
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