If you rent out a room in your house, is that taxable income? And is there anyway you could deduct it?

Answer 1

Yes, rental income is taxable income. However there are deductions against it. You can take a proportion of your rent or interest/tax/insurance payments to deduct. There are variations on how this is doen, but normally this is by a proportion of rooms.

For instance, if there are five rooms in your house (including all bedrooms and general living areas like kitchen and living rooms) and you rent out 1 room, then you can deduct 1/5 of your rental or house purchase expenses.

Again, this is the normal way to do it, but there are other ways. You can go to www.irs.gov - they have lots of brochures that explain all the different rules.

Answer 2

The net income, after expenses, is taxable income. If you don't claim any expenses then the entire rental income will be taxable. Any expense you can attribute to the rental will reduce your taxable income, though there are extra pitfalls if your rental income goes negative.

Direct expenses of the rental are easy to apply. This would include advertising for tenants, maintenance in the tenant's room, and things like that.

Indirect expenses are trickier. You calculate the percentage of the home's square footage rented by the tenant and that portion of general home expenses can be written off as rental expense. A percentage of taxes and insurance is allowed. There are others but I can't remember them exactly.

Answer 3

The net income is taxable. You will probalby fill out a schedule for it as a business transaction on your tax return and you can deduct things such as a prorata cost of the utilities, taxes, etc. as well as depreciation on the facility based upon square footage of some other legit method.

Answer 4

My question is why would you want to do that? You would have to report that on a Sch C only causing you to pay self employment taxes. You would have to 1099 yourself and all 1099 income has to be reported on a Sch C you can't just put that as misc. income.
For the person who gave me a thumbs down. It's like having a roommate duh. Would you tax your roommate? No! IRS will want to know where that money came from. O.K. technically you should but, why? IRS doesn't know that you have a roommate. How would they? Plus there's really nothing you could deduct. If your talking about a rental property then yes there's alot you could deduct but for collecting rent from a roommate nothing.

Answer 5

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