Renting out your home is one way that you are able to bring in a little extra money. But the amount of time and the amount of space that you rent out with determine how you will claim the money and if you can go for any deductions. In most cases, renting out the home or a bedroom in the home for a long holiday weekend will not require you to claim the money that you made. But if you rent out on a regular basis and make a profit from your home, you will need to claim this as personal income on your tax return. If you have ever done a temporary rental of a room in your home during this tax season, make sure to contact the professionals at Johnson, Johnson, and Associates today. They can help you fill out your tax return properly and claim all the deductions that come with this income. Contact them today!
The Time Limits
There are certain time limits in place that will determine whether you will need to claim the income made on renting out a part of your home or if you can avoid doing this during tax times. In most cases, if you rent out your home for less than 15 days for the whole year, this is considered tax free income. So if you go out of town for a weekend or a holiday and allow some people to rent out your home for those few days, you can keep the income and don’t have to worry about paying taxes on it at all.
On the other hand, if you plan to rent out your home on a more regular basis, or anything 15 days and over, you will need to keep good records of the money you make and claim it as income on your tax return. While this is pretty easy to keep track of, there are always certain things that may change up how you claim and you may need to call in the professionals with Johnson, Johnson, and Associates to ensure that you are getting everything placed into your tax return properly.
What You Can Deduct
If you only have someone stay in your home for a few days, you most likely won’t be able to deduct anything on your tax return. You aren’t counting the money on the tax return so it stands to reason that you aren’t going to be able to deduct any expenses as well. There aren’t really any exceptions to this, although talking to a tax professional can help you to determine if there have been any changes in this rule.
On the other hand, if you do have someone staying in your home, or in a room of your home, for more than the two weeks listed above, you may be able to deduct a few of the expenses. You can deduct some of your property taxes and mortgage interest on the Schedule A if you rent out a part of your home throughout the year. Our professionals at Johnson, Johnson, and Associates will be able to help you determine if you are able to deduct certain expenses based on how much of your home is used as the rental properly.
Keep in mind that you will not be able to deduct any rental related expenses when you are only using the home periodically through the year or only using a certain part of the home for rental property. This includes things like having the home professionally cleaned before and after the guests have stayed; you will not be able to receive a deduction on this service.
Filing Correctly This Tax Season
In order to file your tax return properly, you need to make sure that you understand the rules listed above. Figure out how long you rented out the room or part of your home. If someone was just there for a few days and that is it, you won’t have to worry about filing any information about this. On the other hand, if someone stays at your home for more than two weeks, or you have multiple groups of people rent out of your home and their stays totaled more than 14 days through the year, you are going to have to claim this information on your tax return.
If you do rent out your home for more than 14 days throughout a calendar year, you need to keep records of this money. Keep track of the days when someone was staying in your home and how much they were charged for staying there. You will need to bring in these papers to your tax preparer, such as the professionals at Johnson, Johnson, and Associates, to determine how much you will need pay taxes on this tax season.
Renting out your home can have huge implications. If you rent out for just a few days, you are usually free from issues with taxes. But any time you go past this time limit, the IRS considers you as making income from your home and you need to claim this as income. When you need help figuring out whether you should count the rental income and what deductions you can get for this income, make sure to contact Fred Johnson at Johnson, Johnson, and Associates, Inc. in Yeadon, PA. We can help you to organize your rental paperwork and get you the best return possible this tax season.
Johnson, Johnson & Associates, Inc.