My mom is helping us buy a house. My roommate will be moving with us as well. I'm going to have a written contract signed by both of us (stating how much he will pay etc), but will I have to report this as an income?
2007-04-05 00:27:12 · 6 answers · asked by PlasticTrees 2 in Business & Finance ➔ Renting & Real Estate
It depends on how you structure it I would think. If it is rent - yes. If it is paying expenses (ie sharing costs) probably not.
2007-04-05 04:58:42 · answer #1 · answered by Roger C 5 · 0⤊ 0⤋
When you say "us" it depends who that is. Your best bet may be to consult with an accountant familiar with the laws of your state regarding this, since what you're doing is essentially setting yourself up as an impromptu "business" by owning a property and renting it out.
When you say "written contract signed by both of us" this is called a "lease", and be sure it's not JUST about how much you get paid. There are sample leases in books at the library or bookstore (NOLO makes a great line of business-related documentation) or on the web. Also be sure to check if your state has a Landlord-Tenant Act. If you're not writing a lease specifying all the terms of your roomie living there, this law will govern your responsibilities and rights, as well as your tenants, regarding things like property maintenance, default on payment, eviction, etc. etc. etc.
Also using a property as a rental property comes with other "gotchas" when it comes to tax-time, particularly when you sell the house. As I mentioned, a good accountant can ensure you're doing things the right way.
Good luck!
2007-04-05 07:42:26 · answer #2 · answered by agentdenim 3 · 0⤊ 0⤋
Yes. ........But you probably knew this.
If you get payed it is income, but not all of it is, you can deduct costs and such...maybe even to total sum
Better check with a specialist as you can also get many tax benefits and depending on the city where you live you can even get a reduction on some taxes for renting out rooms...no kidding. There is more money here than you may think.
2007-04-05 07:36:07 · answer #3 · answered by Puppy Zwolle 7 · 1⤊ 0⤋
Yes it is income, but you can deduct your rental expenses so you may not wind up paying much or any tax. Here's a good place to start:
http://www.irs.gov/publications/p527/index.html
2007-04-05 07:44:33 · answer #4 · answered by Peter P 3 · 0⤊ 0⤋
Yes.........it is rental income. But you can deduct his protion of the expenses that come out of that income.
2007-04-05 09:19:20 · answer #5 · answered by Anonymous · 0⤊ 0⤋
the answer is NO,your roomate is a man or what? ur income is a personal n secret thing..DONT LET STRANGER KNOWS IT
2007-04-05 07:36:07 · answer #6 · answered by ? 2 · 0⤊ 1⤋