FHA house, Room Rental Income

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FHA house, Room Rental Income

Christopher Carbonel
Member since 2019 · 7 posts · 0 votes

Do I need to declare my rental income when I file for tax? What are my options? 

My other question is, we are planning on saving all our rental income to acquire another property. When the time comes that we are financially ready for another property, is there going to be an issue if our funds came from our FHA room rental income?

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  • Nicole Marshall
    Indian Harbour Beach, FL · Member since 2018 · 92 posts · 99 votes
    6y

    To answer your first question, yes, you need to declare rental income on taxes. There are plenty of threads on the forum that go over this. I use TurboTax to do it, but if it's your first time, you'd likely want to hire a CPA to accurately report everything.

    I don't know for sure, but I would assume if you reported the income on your taxes and you had no fine print in your FHA documentation preventing you from renting out rooms, then you should be fine to use that money for another property. Your best bet is to properly document everything. I deposit my room rental income into a separate account (vs my normal checking account) and I do NOT accept cash from my roommates. I make sure they send me rent through something traceable.

    Hope that helps. Good luck!

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    6y

    @Christopher Carbonel

    You are required to report all your income on your tax return. Failure to do so may result in filing of a fraudulent tax return. Including your rental income may actually help your tax situation by owing less in taxes.

    There shouldn't be an issue in your second question.

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  • Christopher Carbonel
    OP
    Member since 2019 · 7 posts · 0 votes
    6y

    Thank you for all your replies. This communitY has been really helpful. One more thing, It's legal to rent out rooms on my FHA loaned house as long as I live there right? I just wanted to be sure. Are there other concerns that I need to know about when renting out my room?

    Thank you! 

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