If you are considering putting a rental on the market for the first time, whether it's a second home, an AirBnB in your basement, or any other property, be aware that any rent you receive needs to be reported as income, including cancellation fees, goods or services in lieu of rent, and certain expenses if the tenant pays them for you. Some other considerations that new and experienced landlords should keep in mind:

  • A security deposit is not considered income as long as you plan to return it. As soon as you know you will be keeping it, it becomes taxable income in that year.
  • Keep track of expenses that we can deduct for the property, like mortgage interest, property taxes, maintenance and repairs, and advertising--I can provide a complete list for you.
  • If you rent out your home, or a room, for 14 days or less per year, IRS does not need you to treat it as a rental, and in fact that income is not taxable. If you hit 15 days of renting, though, we do need to report the rental. For any vacation/short-term renting situations, please keep track of how many days you and your family use the property, and how many days it is rented out.
  • For short term rentals like vacation homes and AirBnBs, also keep in mind that your locality (city or county) will likely have an entirely separate reporting system, treating your rental like a hotel, meaning the income is subject to additional taxes.
  • If you are providing substantial services to short-term renters, as in a bed & breakfast, we may need to treat it as an active Schedule C business and not just a passive rental--different taxes apply.