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Tax Law (Questions About Taxes)/Not-for-profit depreciation


I rent out a home (formerly my second home, now a third home, my first home is a parsonage) well below Fair Market Value and well below the total expenses.  I intend to keep doing so.  I put my income on line 21 as "not for profit" income and item my deductions on Schedule A, not exceeding rental income.  Do I depreciate if I don't use Schedule E?  Would depreciation be a factor if I were to sell it when the mortgage ends if it were always a not-for profit?


Thanks for your question.

You are correct in showing the income on line 21.  

Your deductions go on Schedule A.  Regardless of amount, the property taxes can be deducted.  The mortgage interest can be deducted but you are limited to deducting interest on only two houses per year.  If you still have expenses after deducting those, you can deduct additional expenses as Miscellaneous Itemized deductions.  These are subject to 2% of your AGI.  Any depreciation would be deductible here.

If you take any depreciation, it would reduce the basis of the house, thus increasing your gain when the house is sold.  However, if you are entitled to depreciation take it, as the IRS will reduce your basis for depreciation allowed or allowable.  It does not matter if you actually take it or not.

Hope this helps

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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