Rental Income - treatment for income tax?

Question

If a party rents a room to another party and that second party writes checks directly to utility companies are those payments considered rental income for tax purposes or not?

Answer 1

We would need more information but......

If a tenant is paying utilities in lieu of paying rent, those payments would be considered income. To offset this income you could deduct the renters share of the utilities as well depreciate the renters portion of the house.

Answer 2

Yes it would be considered rental income. The total amount the tenant paid directly to you and to the utility companies is rental income to you.

From this total you will subtract the tenant's share of the utilities, using Schedule E.

If the tenant is only paying enough of the utilities to cover his share, you will come out even and owe no income tax on what the tenant paid for utilities.

If the tenant is paying more than his share, the difference between what he has paid and his share is the amount of the utility expense that is taxable to you.

If he is paying less of the utilties than his share, the shortfall is subtracted from the other rent he has paid.

Answer 3

I would think not since the checks went to the utility company for the tenants use of the electric & not the landloard. The land loard would only claim the rent that he is getting for the room.

Answer 4

the rental income is taxable income, but you can claim the mortage INTEREST (not repayment element) as a cost to reduce your profit or create a loss. It does not matter that the mortgage is a residential mortgage and not a buy to let mortgage

Answer 5

it is technically income because you received a monetary benefit, but would the IRS every find out is the question?