Regarding deductions if we serve a church mission.
My husband and I are planning to go on a church mission in 2024 in another state or country. We will need to rent our home in Idaho while we’re gone for 18-24 months since we still have a mortgage to pay on it. Can we deduct the portion of rent that will cover our mortgage expenses as well as other expenses like the storage of our household belongings, possible maintenance to the home while we’re gone, and also the monthly costs of our mission since we will be devoting all our time to this service? Also what form(s) will we need to submit for this for our 2024 and 2025 tax years since the mission will involve time in both years?
Answers
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Hello, lsmanderino!
That is a great question!
First, you need to determine if you are renting your home for profit or not for profit. If you don't rent the property to make a profit, you can't deduct the expenses in excess of the rental income. However, you can deduct the mortgage interest and real estate taxes as itemized deductions. You'll report not-for-profit rental income directly on Schedule 1. See page 16 of Publication 527.
If you are renting for profit, you'll report the rental income and expenses on Schedule E.
In either case, you cannot deduct the mortgage principal payments from the rental income as this reduces your outstanding loan balance. Expenses such as repairs and maintenance you pay while it is rented, can be deducted against the rental income.
As for the monthly costs of your mission, if this cost is not paid directly to a qualified organization, you will be unable to deduct the cost. For more information on deductible charitable contributions, see Topic No. 506.
