Taxes – Real Estate management – What is considered rent
REntal income is defined as any compensation received for the occupation or for the use of real property. Also in addition to rent there are other things which can be considered rent such as
- Property services – Services which are are fair market value in lieu of money must be included as rental income.
- Advance rent – This is any payment the taxpayer receives before the period that it covers. Advance rent is allways included in rental income during the year it was received. This is also the case if the period it covers in in another tax year even if another method of accounting period.
- Security deposit, kept – If the taxpayer plans on returning a secuirty to the tenant, then this amount is not included in rental income. However the security deposit or part of the deposit is kept for breach of the agreement, or for some other reason the deposit should be included in the rental income.
- Expenses paid by tenant – When the tenant pays the expenses this is considered rental income. Since it is considered income it can also be a deductible expense because paymet was included as income.
- Payment for canceling the lease – If the taxpayer receives payment from the tenant to cancel the lease, that payment is considered rent and should be included in rental income.
- Rental property used as a home – Real estate that is being used as the taxpayers hoe and rented less than 15 days is not considered rental income. The income and expense are not entered on the tax return.
- Part Interest – Owning part of the interest in the property requies the taxpayer to claim that part of rental income on his tax return.
- Fair rental value of portion of building used as a home – Fair rental is the amount a person would be willing to pay for rental use that does not happend to be related to the taxpayer. Therefore if the taxpayer occupies any part of a building, then its gross income would include the fiar market value of the area being personally used.
- Lease with option to buy – A rental agreement that gives a tenant the option to purchase the home. In this case payments received are considered rental income unless payment decides to purchase, then payments would be considered part of the selling price.

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