Rent Your Property Tax-Free!
Most income you receive is reported to the federal and state tax authorities as taxable income. However, renting out your home or vacation property on a short-term basis can be tax-free if you follow specific IRS rules.
If you receive rental income for less than 15 days per year, that income is generally not taxable.
In addition to tax-free rental income, you may still deduct your mortgage interest expense and property taxes as itemized deductions. However, neither of these tax benefits is reduced by the income from up to two weeks of rental activity.
Why rent out your property?
It’s a thought to mull over, but ask yourself this, why would someone want to rent your property?
Give these ideas some though
Consider renting your home for participants and fans if a big event is in town. Such as:
- Sporting events
- Family gatherings
Vacation home rental.
If you have a cabin in the mountains or cottage on the sea, consider renting your place for two weeks. If you find responsible renters, you may have an opportunity to find reliable repeat renters each year.
Frequently travelers from other cities and countries would love to rent out homes or rooms within homes while traveling. This lets travelers have an authentic local experience.
It can be risky!
Before jumping into this tax-free income opportunity, you need to consider the stress factor. You should have,
- a proper rental agreement- best if reviewed by an attorney,
- a damage deposit,
- and insurance
Additionally, know that if you rent your property for more than 14 days, all rent received is taxable, and IRS rental income rules apply. And remember to review any local regulations before renting your property.
Check out the major home rental companies. They may help you better understand your options before renting your property.
Navigating rental properties and taxes is not always cut and dry. We can help you understand your position and the tax ramifications. Contact us if you need help.