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You say "properties". IIRC the only interest and taxes that are straight deductions are your primary and secondary residences. Any property that is held for investment (rental) is done on a separate form. That form includes your rental income, ALL EXPENSES including interest and depreciation. Any property that is held "short term" (flipping) is classified as short term capital gains and requires that form.
OP: go to www.irs.gov
Trust me, there's a form for everything there. Depending upon your adjusted gross income, you may be able to file there for free.
OK I'm NOT a cpa, but here's my advice which is coming from 30 years of owning rentals houses:
Before anything else, CONTACT A CPA. Do it now, before their busy season starts.
1. Did you have any "gain" on the sale of your house? The first $500K of NET GAIN is tax free for married, filing jointly taxpayers. I think that holds true even though that house was probably only in your name.
2. Setting up a depreciation schedule on the rental is done on one form. Listing the income and expenses (as I wrote above) is done on another. I used to know the form numbers but I never look at that part of my return.
3. If the rent on her townhouse is "covering the mortgage", SELL IT NOW, or as soon as practicable under the terms of the lease, and to take advantage of any "2 of 5 years" tax advantage on any gain.
TOTAL EXPENSES of a rental house AVERAGE NATIONWIDE about 45%-50% of rent. If the rent is covering the mortgage, you are (or very shortly will be) losing your shirts.
Good luck and congratulations on the marriage.
golfgod
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