Tax Advice for Property Managers

If you are renting out a part of your home, a seperate dwelling, or an investment property, there are some important things you need to keep track of for your income tax return.   

Generally, you'll report the income you receive, less the expenses and depreciation on the rental space, to calculate a net taxable income.  You'll include this info on the Schedule E of your 1040 individual tax return.  You may also have local and state tax issues to address, check with those tax departments to find out what those rules are.  

Tools and Tips 

**** You will receive income (and incur expenses) for your rental unit. You need to keep track of that information. You can use a notebook, rely on your property manager or hosting service, or use a                                              to record your income and expenses.

**** Depreciation on your rental space can also be expensed.  

**** If your rental space is not a separate property, but a part of your main residence or a guest house on your property, then calculating your expenses and depreciation becomes a bit more complicated - you'll have to allocate those expenses based on the percantage of space used for dedicated rental purposes. For example, a 800 sq foot rental space in a 2400 sq foot house would be allowed 33% of certain expenses to be included on the rental property, such as utilities, mortgage interest, and real estate taxes.  You would also have to factor in the number of days the space was actually rented out. 

*** Direct expenses related to your rental property can include supplies (linens, paper products, soaps), cleaning fees, repairs.