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| *Ostroff, Fair and Company>>>Renting & Real Estate |
If you own a place and get a roommate to help with mortgage? |
is that considered an extra income? If so, how do you write that in your taxes - business or just add as an regular income? Silly question, but totally new to this topic. I wouldn't tell the IRS anything. I have never claimed income when I have had roommates. Not their business. You are charging them rent, so they are a tenant and you are a landlord. Legally you are required to report it, but most homeowners doing a room-mate to help with the mortgage agreement don't. You have to report it on your taxes as a small business. However, what they pay you in rent can be offset by part of your actual mortgage costs as well as part of your utilities if they aren't paying for part of that. One way to get around this is to NOT charge them rent, but have them pay 100% of the utilities instead (agree that they pay them up to a certain $ amount based on whatever you were originally going to charge as rent). Same amount of "income" for you, different situation, one taxable, one not, one a "business," one not. :) i wouldnt write that on my taxes.. It is either earned income from rent, or cash under the table for a discounted rate... if you get my drift! (Cash and money orders are great for that) There's a separate section for income from a rental property. http://www.irs.gov/taxtopics/tc414.html... That's the page you'll want to read over. There's a way to also count depreciation of the portion rented against how much you have to pay in taxes. Good for you trying to go about it the legal way. Tax evasion penalties are incredibly high. All it takes is your renter being mad at you and they can just call and report you to the IRS as they can prove they gave you the money. why would you tell the irs? |
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