Primary home turned into rental

What is the name of your state?Colorado
Our primary home was turned into a rental in June of 2005 after we purchased a new home. I am doing our taxes online and my question is this, when figuring out our rental income do I include what tenants were paying for rent or do I use rent minus mortgage payment as our income. Or would I use the mortgage amount as an expense? Any help is appreciated.

You hire a tax pro to get you set up properly! You clearly don't have any idea how rental income is handled & you're going to get yourself into *big* trouble if you expect turbotax to lead you to the right bottom line. TT is a great way to screw up with confidence.

Tell them you want an EA with rental experience. BTW, depreciation is optional, despite what the IRS pubs say. However, the burden is on you when you finally sell to prove that you didn't depreciate the house.

Yes it is my intentions to see a tax preparer. I was just trying to get some rough numbers so I can kind of know what to expect. After I sent that question I realized it was a stupid one. I know I can deduct the interest, taxes and insurance for the time it was rented in the year. Let me ask you this though, you mentioned that it is optional to depreciate. Would it be best to do that or not if I do plan on selling in a year?

If you're going to sell in time to claim the primary residence gains exclusion, you probably should not claim depreciation. To do this, you have to close the sale within 3 years of moving out, assuming you lived in the house for at least 2 years before renting it.

Depreciation lowers your ordinary income in the year you claim it, but gets 'recaptured' at 25% when you sell the house. Even if you can exclude capital gains, you still have to recapture any depreciation actually claimed while the house was rented or used as a home office. However, if you're in the 25% or higher bracket now, it might make sense to deduct the depreciation at 25% now & recapture it at 25% later. Think of it as an interest-free loan. If you were in the 28% bracket it would definitely be a good idea to claim depreciation. Drop your taxes by $280 this year & increase them by $250 when you sell in 3 years. Not even my parents will give me those kind of loan terms.

Yes it was our primary home for almost 4 years. I never wanted it to become a rental. My husband thought it was a good idea for the extra income but he is in the military and currently deployed to Iraq and he's not here to deal with it. I can say this, the extra money is not worth the headaches I have already had to deal with. Your reply has been very helpful. Thank you.

When we had rental property we tracked the following items:
-mileage to/from the property for renting, maintenance ...ect
-cost of repairs, maintenance
-rent received
-any commissions paid (such as to a rental agency)
-costs to rent such as forms, phone calls, credit report
-phone calls related to the rental
-cleaning
-mortgage interest (principal portion is not deductible)
-insurance (just regular insurance, not belongings)
-anything directly related to the rental, the renting of the rental.
-if you now live far away you can return at least once a year to check up on the rental with transportaion, lodging and food being deductible.
Turbotax can be found online and they let you play with the tax return for free. you only pay if you print or send. That will give you an idea of other deductions and help you prepare. The first year is the hardest in organization. Whether or not you depreciate the property is something you and your tax advisor should discuss.