Looks like you will have to eat the rent payments to me. However, your accountant should be able to advise you with "business or job related" expenses and if they are tax deductable. Most of your living expenses in Alabama, rent, utilities, transportation, clothing, etc. should be eligable for a deduction.

Holly:

Well, there a few things to consider. If you had the place available for rent then you could take a loss (reported on Schedule E) but it would not be your mortgage payment. It would be the interest, taxes, property managment fees, depreciation to name a few. However, there are rules that go along with that (ie: depreciation - you may need to recapture). If you plan on moving back into the home, you need to compare taking the loss in 2008 and recapturing depreciation in 2009 to your overall income.

It is hard to explain the rules and regs of the IRS code. The IRS has a publication on their website covering rental property.

If you have any further questions please feel free to contact me 334-237-2657

Hi Holly, first, thanks for your service! Second, I think the best thing to do would be to contact a CPA, or tax accountant. Are you back in your home in Texas?