Transcript:
Tracy Byrnes: So lots of people investing in real estate these days, and many are using the investments as income rental income as a matter of fact. Lisa Greene-Lewis, TurboTax expert and CPA, is here with us right now to help us understand. There's a ton of things people need to understand when they rent their places out, Lisa. So let's start from the top. I buy a place. I rent it. Where do I report that rental income because that is income to me that the IRS is going to want a piece of?
Lisa Greene-Lewis: Yes, so you would report your income on your Schedule E, and that would go with your personal taxes. But don't forget, you also get to deduct the expenses related to your rental.
Tracy Byrnes: Right, so what are some of the things that could offset that — because the more I offset the income, the less tax I'm going to pay.
Lisa Greene-Lewis: Yeah, there's so many things that you could deduct for a rental. So your advertising, what you pay to advertise your rental, management fees if you pay a manager to manage your property, repairs, maintenance. You're having the garden maintained, then you would be able to deduct that.
If you pay utilities for your renters you could deduct that. The mortgage interest, which would be reported on Form 1098, you'll be able to deduct that as well, or property taxes. And then a big one, you get a deduction for depreciation as well.
Tracy Byrnes: Huge list. People should pay attention to that because you could really get that income down, but there's a rule, right? There's a certain amount of days in order for this to work.
Lisa Greene-Lewis: Well, there's a certain amount of days where you need to report your rental income, and that's if you rent your property out more than 14 days then that would be the point at which you would report the income and deduct your expenses. So if you rent your property out less than the 14 days, or 14 days or less, then you don't need to report the income.
Tracy Byrnes: So if I rented my home for the Super Bowl, and it was a five-day rental, I could just pocket that money.
Lisa Greene-Lewis: Yes, you don't need to report it on your Schedule E.
Tracy Byrnes: That is good news and a big miss on my end because I should have done it when they were at the Giants stadium. OK, so if I'm Airbnb-ing my place now, are the rules different for that?