If you're renting out a house, a boat, an apartment or any of your property that can be considered a home, then you're required to report income from it when you file your taxes in 2015. Income from rent must be included, but you can deduct certain related expenses on your return.
Here are some of the things you might want to consider when renting out your property:
- Your rental income may be subject to Net Investment Income Tax.
- If you rent out for less than 15 days, then you do not need to report the income you received.
- If your property is used as a home, then your deduction for rental expenses can't be more than the rent you received.
- If you use your property and also rent it to others, then you need to divide the expenses between the rental use and the personal use.
- If your property is being used by someone who pays you less rent than the fair rental market price, then it may be considered personal use.
Usually, rental income and rental expenses are reported on Schedule E, Supplemental Income and Loss. Deductible expenses for personal use such as mortgage interest and property taxes need to be reported on Schedule A, Itemized Deductions.
Remember to report the income you receive from the rent, even if it's for only a month or two. This way, you won't underpay your taxes and run the risk of incurring a tax debt. When calculating the rent, be sure to re-check your math for mistakes. For detailed information on renting out residential property, you may go through the IRS Publication 527, Residential Rental Property (Including Rental of Vacation Homes).
Labels: IRS, Tax Deductions, Tax Filing, Tax News, Taxpayers