Law Office of Tillena G. Clark, LLC

Directions7315 Wisconsin Ave., Suite 400W
Bethesda, Maryland 20814

Tax Newsletter

Reporting Rental Income

Rental income is considered any payment you receive in exchange for the use or occupation of property. For the purposes of federal income tax filings, you must include all rental income as part of your total gross income.

Rental-related incomes can include:

  • Advance rent, regardless of the period covered. For example, if you receive $5,000 all at once for the first and last month’s rent on a five-year lease, you’d report the total amount received as income for that filing year.
  • Security deposits, if not returned to the renter. Any portion of a security deposit kept because a tenant did not live up to the terms of the lease is considered income.
  • Payments which a tenant makes for canceling a lease.
  • Any tenant-paid expenses, such as emergency repairs to a broken furnace. The repair cost may then be deductible as a rental expense.
  • Property or services in lieu of rent. Include the fair market value, or agreed upon price, as income on your tax return. For example, if a painter/tenant agrees to paint your apartment building in exchange for not paying two months’ rent, you would report the rent’s value, and then typically deduct the painting as a rental expense.
  • Lease with option to buy. Payments received under an agreement with an option to buy clause are generally considered rental income. However, payments after the option is exercised are part of the property’s selling price.
  • Rental of property also used as a home. If you rent your home out for 15 or more days a year, it is reportable income.
  • Part interest. If you co-own a rental property, you must report your proportionate share of the rental income.

Whether you rent out rooms, buildings or apartments, you normally report your rental income in conjunction with your rental expenses.

  • Volunteer Work and Tax Deductions
    You may be able to deduct certain expenses that are related to volunteer services offered to a qualified charitable organization. However, these services should not have been reimbursed or used for personal... Read more.
  • IRS Recharacterization of "Alimony" Payments
    Three major issues commonly resolved in a divorce decree or agreement are: alimony, or spousal support; division of property; and child support. Each has its own tax treatment and implications. In general, for federal income tax... Read more.
  • Personal Injury Awards and Taxes
    The U.S. Internal Revenue Service (IRS) takes a broad view of what is considered “income” for purposes of taxation. The U.S. Supreme Court has provided additional interpretation, stating that “any funds”... Read more.
  • Tax Issues Related to Contaminated Property
    The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) imposes liability for the investigation and cleanup of contaminated real property without regard to whether the landowner created or allowed the... Read more.
Tax News Links
Share This Page:
Designed and Powered by NextClient

© 2006 - 2023 Tillena G. Clark, LLC. All rights reserved.
Theme WebExpress™ attorney website design by NextClient.com.