Income Tax Considerations When Renting Real Estate

 This blog post is worth reading if you have any questions about income property and taxes.

Via Charles Perkins (Charles G. Perkins, CPA):


Income tax considerations when Renting Real Estate

Rental Income

For IRS purposes rental income is taxable income in the year received.  There are some exceptions and special considerations for some income.



Sam is a landlord that has rented out a single family residence for several years to one family for $1,000/mo.  In Feb of the current year the family gives notice that they will be moving out at the end of the month.  The tenant has paid timely each month and has the balance held as last month’s rent applied to February.  The tenant was refunded $300 of his $700 damage deposit.

Sam quickly is able to fill the vacancy and the new tenant moves in on March 15. The new rent remains at $1,000/mo.  Sam collects first, last and a damage deposit.  The damage deposit is $700.  This tenant pays timely each month except December.  In December he is unable to pay the rent until December 30th.  At that time you collect a $50 late charge and accept a credit card payment.  The payment is processed right away but the funds are not available to you until January 2nd.


Calculation of taxable rental income

taxable rental income


Charles G. Perkins, CPA

Servings Small Businesses in the Puget Sound Area


Cell: (206) 422-5504

Office: (206) 228-1988




Charles G. Perkins, CPAI look forward to meeting your business and tax needs.  I also have many partners in business that can meet your other business needs.  These include contractors, insurance agents, investment advisers, financial planners, mortgage advisers, and many others.

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