Regardless of whether the applicant simply is renting a portion of the dwelling for commercial/business purposes or if the applicant actually is in the rental business with other properties, any depreciation deducted by the taxpayer must be added back to the net rental profits amount. In both cases, Schedule E showing the amount of depreciation taken must be attached to the Form 1040, if a return was filed.

Depreciation on rental properties is not allowed for Tax Credit purposes since it represents an "on paper" tax shelter device and not a direct "out-of-pocket" expense [COMAR 18.07.01.03F(1)(c)].

In determining the net rental profit in cases where the applicant owns more than one rental property, the positive income realized on one property must be counted individually and cannot be offset or reduced by a loss on another property.