If you use the dwelling unit for both rental
income and personal purposes, you generally must
divide your total expenses on your tax return between the rental income use and the personal use based on the number
of days used for each purpose. Unless your gross rental income is more than your expenses
of rental use, you may not be able to deduct all your expenses of rental
income use on your tax return.
If you use a dwelling as a home and rent it for fewer than 15 days during the
tax year, do
not report any of the rental income on your tax return and do not deduct any expenses as rental
expenses on your tax return. In
this case, however, you may sill be able to deduct mortgage interest, property
tax, and
casualty losses as itemized tax deductions on Form 1040, Schedule A.
If you do not use the dwelling unit as a home and you are renting
it to make a profit,
your tax deductible rental expenses on your tax return can be more than your gross taxable rental income, subject to
certain limits.
If you are a real estate dealer, rent received in the course of your trade or business
is included in self employment income on your tax return.
Rental income received from the use of or occupancy of hotels, boarding houses, or apartment
houses are included in self employment income on your tax return IF you provide services to the occupants.
Services are considered provided to the occupants if the services are for the convenience
of the occupants and are not services normally provided with the rental of rooms or space
for occupancy only. Maid service, for example, is a service provided for the convenience
of occupants, while heat and light, cleaning of stairways, and the collection of trash are
not.
Rental income received by trailer park owners is rental
income from real estate activities and is not
included in self employment income on their tax return unless the services the owners provide are substantial
and for the convenience of tenants. Services that are substantial and for the convenience
of tenants include supervising and maintaining a recreational hall, operating a laundry
facility, and helping tenants buy or sell their trailers. Rental income received by owners
providing substantial services is included in computing self employment
income on your tax return.
If you have self employment income figure your net
taxable earnings on Form 1040, Schedule C. Compute your
self employment tax on Form 1040, Schedule
SE.
If you earn or receive rental
income during the tax year that is not subject to tax withholding, or if
you do not have enough income tax withheld, you may have to pay estimated tax.
