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If you rent out a house you own, do you have to pay income taxes?

My friend moved up from Georgia to the Northeast and rented out his house. Would he have to pay income taxes on any rent he received, even if he isn't making a profit?

Public Comments

1. You only pay taxes on profit. If it is a loss, he can deduct the loss against other earnings to lower his taxes.
2. If he isn't making money, it's not income. When taxes are done that's all figured out. He might actually have a loss on the property which would lower his tax liability. And I should clarify, it's not "NET" income which is all that matters, income taxes will not be paid. Renting is a business. You don't pay taxes on losses. I have provided a link where you can check if any taxes may be owed.
3. YES. Whether or not the rent is covering the mortgage payments you have to pay taxes on the income. It is only considered a loss if the property decreases in value! The good news is that you still are able to continue to write off the interest on your loan on your taxes
4. You are going to want to include that if he isn't making any money. Their are alot of write-offs in rental homes. Don't look at the rent that you get, look at the Mortage, taxes, time spent , repairs ect. I have had homes for years and you almost never make anything from them but the home value increases and that is where you make money.
5. Yes, rent is considered income.
6. I can't believe some of these answers. EVERY PENNY is income! He can claim a loss at sales, but the rent he collects is 100% taxable! Can you imagine our economy if real estate income was not taxable?