{"id":22,"date":"2016-01-04T21:37:40","date_gmt":"2016-01-04T21:37:40","guid":{"rendered":"http:\/\/www.chahalassociates.com\/blog\/?p=22"},"modified":"2016-01-04T21:37:40","modified_gmt":"2016-01-04T21:37:40","slug":"5-common-rental-property-income-mistakes","status":"publish","type":"post","link":"https:\/\/www.chahalassociates.com\/blog\/2016\/01\/04\/5-common-rental-property-income-mistakes\/","title":{"rendered":"5 Common Rental Property Income Mistakes"},"content":{"rendered":"

\"VacaEntering the property rental market is a common way to increase your net worth in the long run as well as generate some passive income in the short run. If you are new to the landlord business though, you may fall prey to some common rental property income mistakes when you file your tax return. Of course, the best way to ensure that you don\u2019t make any of the following mistakes is to have a professional prepare, or at least review, your return; however, knowing what the most common mistakes are is a good place to start.<\/p>\n

    \n
  1. Not declaring rent when it is received \u2013 <\/strong>any rent received by a landlord must be declared in the year it is received. It is common, for example, to require a deposit as well as first and last month\u2019s rent when leasing a property. Even though the last month\u2019s rent isn\u2019t actually due yet it must be declared in the year when you receive the funds.<\/li>\n
  2. Security deposits count as income if not returned \u2013 <\/strong>if you collected a $2,000 security deposit and find that you need to keep $1,000 of it when the tenant moves out to repair damages and\/or clean the property you need to declare the $1,000 as income. Of course, you may also have corresponding expenses if the funds are used to complete repairs.<\/li>\n
  3. Expenses paid by a tenant are income to the landlord — <\/strong>if your tenant fixes something on the property, the money spent by the tenant is actually income to the landlord if the cost of the repairs is deducted off the rent. Again, you may also have a corresponding deduction for the cost of the repairs, meaning you need to declare both income and expenses.<\/li>\n
  4. Property and furnishings are depreciated differently \u2013 <\/strong>property is often rented \u201cfurnished\u201d. You may deduct the cost of the furnishings but make sure you calculate the deduction properly. Residential rental property is depreciated over 27 \u00bd years while furniture is depreciated over just five years.<\/li>\n
  5. Failing to document \u2013 <\/strong>if it isn\u2019t in writing is doesn\u2019t count! Everything from your original lease agreement to the cost of replacing a lost key should be documented in writing. Not only does this ensure that you will get credit for all your allowable deductions but is also protects you in the event of an audit by the Internal Revenue Service.<\/li>\n<\/ol>\n

    By avoiding these five common rental income tax mistakes you can dramatically reduce the chances of an error on your tax return.<\/p>\n

    If you are tired of overpaying taxes or even worrying about taxes, call 510-222-5800<\/strong> and ask for Navjeet<\/strong>. \u00a0Our goal is to lower your taxes within the letter of the law and make the process stress free.<\/p>\n

     <\/p>\n

    Chahal & Associates is a Bay area tax and accounting firm<\/a>. \u00a0We have three convenient offices to service the Bay area, Emeryville<\/a>, San Rafael<\/a> and Pinole<\/a>.\u00a0Our firm provides small business accounting<\/a> services, payroll<\/a> and a variety of tax services ranging from international tax<\/a> to IRS Problem Resolution<\/a> to simple tax preparation<\/a>. \u00a0For business owners seeking to establish a business within the United States, we also provide establishing United States Operations<\/a>, High Net Worth Immigration Planning<\/a>, Expatriate Taxes<\/a>, and Resident and Non-Resident Alien Tax Services<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Entering the property rental market is a common way to increase your net worth in the long run as well as generate some passive income in the short run. If you are new to the landlord business though, you may fall prey to some common rental property income mistakes when you file your tax return. […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[6,4],"tags":[13,14,15],"_links":{"self":[{"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/posts\/22"}],"collection":[{"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/comments?post=22"}],"version-history":[{"count":1,"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/posts\/22\/revisions"}],"predecessor-version":[{"id":24,"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/posts\/22\/revisions\/24"}],"wp:attachment":[{"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/media?parent=22"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/categories?post=22"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/tags?post=22"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}