Tax filing - Odd situation?

I own a home but rent it out - for less then the mortgage I pay. I rent an apartment out of state. For the home, I do employ a management company to collect the rent and to deal w/ the tennants.
Do I have to claim the home as an "investment property" on my taxes if they haven't lived in there for more than 4 months of 2007? What would get the most return - claiming the investment or not? I only own this home - would rather sell it but the market is crap.

You may want to hire a professional to do your taxes.

When you rent the property, is the rent the going rate? Just because it doesn't cover the mortgage doesn't mean that you aren't doing this for profit.

If you are renting to get a profit, you use a schedule E. You report the rent and get to take the management fees as an expense, other expenses such as interest and depreciation. While you won't get to take a loss on your taxes, the loss will be deferred until you sell.

Where to report. Report your not-for-profit rental income on Form 1040 or Form 1040NR, line 21. You can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions.

Claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on line 23 of Schedule A (Form 1040). You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income.