Posted on 12/29/2010 5:04:59 PM PST by Chickensoup
I am considering roommates to share expenses. I own a house and have a small mortgage. I have room for up to three roommates. I am told that if expenses are shared it is not income. I expect to pay the mortgage out of my own pocket. If someone paid the taxes, and others paid the insurance and other expenses would it be considered my income? I have not been able to find an answer.
if they give you financial consideration in return for lodging, then it is income to you ... better consult a CPA about how to do your taxes and how to apportion your expenses and deductions and make sure the renters dont try to take deductions they are not entitled to take. You may be forced to depreciate part of your property ...ask a good CPA. You may also have to meet some local ordinances about rental property
Rent is income and taxable, but you need to be aware of all the tax issues surrounding this venture so you don’t pay more taxes than needed and you are also following IRS rules about turning a primary residence into a rental property. Best to talk to your cpa if you have one.
Sounds like a scam and that’s probably the way the IRS would look at it.
If the taxes, insurance and expenses are in your name I doubt that it matters who “pays” the bill because you are the one who is legally benefiting. Sounds like income.
If it looks, acts and quacks like a duck....
I did and didnt find much.
If your best bud or girlfriend moves in with you, and they share expenses, is it income to you?
You would be able to have a deduction for the upkeep of that home, based on the sq. ftg. the tenants are using.
Get enough rent to pay for all of the utilities. Check with you ins. co. to see if the tenants property is covered under you homeowners, or they may need to get tenants insurance.
Make sure you spell everything out in a good lease.
What if they dont give it to me, what if they pay their portions of the bills.
If your girlfriend moved in and you both split expenses, would it be income to you?
If your girlfriend moved in and you both split expenses, would it be income to you?
“If your best bud or girlfriend moves in with you, and they share expenses, is it income to you?”
Yes. No different than renting out space to a stranger.
The taxes and insurance should be in the mtg. payment that you make.
No it isnt.
I dont want to rent.
Rent is income, but share expenses are not income, according to my wife, the Enrolled Agent Tax Professional. She recommends a set level of contribution to household expenses, rather than having one person pay the taxes, another pay the insurance, and others the other expenses. Thus, all of the money goes into a single, shared pot to cover all expenses. That requires a detailed budget and careful disbursing from the shared pot. This arrangement will pass muster with the IRS as shared expenses and not rent. Thus, it will not be income for any of the residents.
That is what I am looking for. Is there a site or a booklet that can show me how to set this up or is this something that a CPA could show me how to do. I had heard of this previously but have not been able to find more information.
Thank you.
Have you tried contacting Charlie Rangel? He knows all about that Tax Code thingy.
I am trying my best NOT to be a Rangle.
You should check with your local zoning inspector to determine how many roommates (unrelated to the property owner)may reside in a single family rated district.
if someone else pays the taxes, then you cannot deduct those on your taxes, so it goes both ways
Yes, rental revenue is income, but you will also have some additional deductions you can claim
get a good CPA and do it right
http://www.irs.gov/publications/p17/ch09.html#en_US_2010_publink1000171702 Ask a CPA or call the IRS. The way I read it, is if you don’t charge rent and just share expenses then its not income..
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