The only thing better than getting a huge tax refund is earning money that isn’t taxable at all. One of the ways you can bring in non-taxable income is renting your home to out-of-town visitors.
Of course, there are tax rules you must follow to keep your rental income tax free. Here are a few regulations from the Internet to have in mind when renting your home to others.
14-Day Rental Lease
The biggest factor is the duration you have your home for rent – you want to think short-term here. You can only rent your home for less than two full weeks per year and not owe taxes on your income from the lease.
Even though two weeks worth of rent might not yield much money, in the long run, it’s still money that goes directly in your pocket tax-free. The amount refrains from your adjustable gross income, which keeps your taxable income low and that leads to a low tax bill.
Second Home Rentals
It only gets more complicated if you’re trying to rent out a second or vacation property. The 14-day rental rule still applies, but other factors can include
- Renting your property to others for a limited time
- Renting your property to others the majority of the year
- Using the property yourself and then renting when vacant
Each of these factors yields unique tax implications on the income from your lease – even if you choose a random two weeks which you had tenants and decide to keep that payment tax free. Renting vacation property also has its separate requirements for tax advantages – consult your local tax professional for detailed information.
Rental Expense Deductions
Another way to cut your tax bill with rental property is by claiming tax credits on the costs of renting your home. Common rental expenses can include
- Cleaning & Maintenance
If your deductible rental expenses are more than your rental income, it’s possible for you to use the difference towards shrinking your tax bill even further – see a tax advisor for more.
Getting deductions in order during tax season can take extra time – not to mention factoring non-taxable income with your adjusted gross income; however, there’s no need to worry. With ExpressExtension.com, you can e-file IRS Form 4868 and get approved for a 6-month filing extension.
Contact our U.S – based support team for any questions or help you may need with your e-filing experience. You can reach us at 803.514.5155, Monday through Friday from 9 a.m. to 6 p.m. EST. We also provide email assistance with support@ExpressExtension.com.