I think we are all clear and understand that if you rent out property, the income you receive is taxable. What about the Security Deposit?
Well the security deposit is NOT included inrental income when received if you intend to return the deposit to the tenant at the end of the rental term. However, if the rental deposit is considered a montsh rent then it IS included in your taxable rental income.
Payments received for lease cancellation are included in taxable rental income.
Fair market value of property or services received in lieu of rent are included in taxable rental income. For example, your tenant paints the home in exchange for 2 months of not paying rent. You still need to include those 2 months rental income in your taxable income even though you did not actually receive the cash because you received “value” equal to 2 months rent. Tricky stuff right?!?
As a landlord, it is important to understand your income tax filing responsibilities.
Reach out to us at www.wendybarlin.com AND BIG NEWS – We launch our 8 Week That’s Deductible Program this month. Don’t miss this opportunity to work with closely with Wendy and 9 other business owners to minimize your 2022 income taxes. This program is suited for experienced business owners who paid $50,000 or more in income taxes for 2021 and want to learm how to pay less in 2022!