Rental Income Taxes
How are these figured, or is rental income even taxed? Example. I am buying a student rental that is already lease for 05-06 school year. Tenants pay upfront their rent at the begining of each semester. It is rented for 20k for the 9 month school year so I'll get a 10k check in August. Will this be considered income since I will then have to use it towards the mortgage and expenses? Would I just claim what's left over as income on next years taxes or the entire 20k?
Rental property income and expenses are reported on Schedule E (1040). You report all rent received (even advance rents) in the tax year in which it is received. You report all your expenses for the tax year when the expense was paid.
The net income or loss from your rental property activity is carried from Schedule E to line 17 of your 1040. File Schedule E as an attachment to your 1040 next April.
Your net rental income is taxed at the same rate as your other ordinary income.[ Edited by DaveT on Date 03/11/2004 ]