Renting Out Your Home? What it Means for Taxes
For many people, renting out a home (or a room in a home) can provide much-needed additional income. Homeowners can become landlords for many reasons: they can’t sell their home but must move (for a new job or job transfer, for example), they want to rent out a vacation home for extra income, they want to earn income from rental properties, or they may have an extra room in their home that can be rented to help make ends meet each month. No matter the reason, renting a home comes with a slew of tax implications that landlords must be aware of. If you’re considering renting out a home, read “
The Tax Implications of Renting Out Your Home,” a recent article on the Equifax Finance blog.
According to the article, if you rent your home for less than 14 days per year, you do not have to report the rental income, no matter if it is a business or individual renting from you.
If you are living in your home and renting out a room, it’s a bit more complex. Rental income will need to be reported and a proportionate amount of the mortgage cost, property tax expenses, homeowner’s insurance, association dues, gardening, landscaping, utilities, and maintenance can be deductible. You also need to consider depreciation on the building value of the rented part of the home because when you sell the home, you will pay taxes on this depreciation.
Even more complicated is if you move out of your home, rent it out for a while and then move back in. Your personal residence exclusion will be reduced due to the period of nonqualified use (the period in which you lived in the home as your primary residence). The article recommends discussing this issue with a tax professional to get the details.
Your tax implications will vary depending on your situation, read the full article on the Equifax Finance blog for more information. While you’re there, read the other helpful articles about real estate and taxes as well as other personal finance topics from retirement to credit to identity theft protection and more.