How Renting Your Home Impacts Your Taxes

October 06, 2014

renting your homeIf you’re considering renting out your home, for whatever reason, there are important tax implications to doing so that you should keep in mind. The tax repercussions will differ depending on your situation, whether you are renting out a room in your home to help make your monthly mortgage payment, renting out your vacation home for a very brief period, renting properties as a source of income or renting a home that you are unable to sell but will no longer live in. A few different scenarios are explained in a recent article on the Equifax Finance blog, “

The Tax Implications of Renting Out Your Home.”

The simplest scenario described in the article is one in which your home is rented for less than 14 days. If you rent your home for less than 14 days, you do not have to report the rental income, whether it is rented by an individual or a business.

If you are living in your home and renting out a room it’s a little more complicated. You do have to report the rental income, but you can deduct expenses associated with renting, such as a proportionate amount of the mortgage cost, property tax expenses, homeowner’s insurance, association dues, gardening, landscaping, utilities, and maintenance, which can all be deductible.

If you rent out your home for a while but then move back it is becomes very complicated. According the article, your personal residence exclusion will be decreased due to the period of nonqualified use period (the time in which you lived in the home as your primary residence). If this sounds like something you may do, the article recommends discussing your situation with a tax professional to get all of the details.

Your tax implications will vary depending on your specific situation; check out the full article on the Equifax Finance blog for more information, and while you’re there, read the other helpful articles about real estate and taxes as well as an array of other personal finance topics from insurance to credit to identity theft protection and more.

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