Do I have to pay taxes on rent from roommates?

Question

Hello BP,

Looking to buy my first investment property and was wondering if I were to purchase a home, live in it and rent out rooms to my friends, do i have to pay taxes at the end of the year on the income i receive from them?

Thanks for any info in advance!

Johnny L. · Answer

@Nicole W.

Hey Nicole! Thank you! Ill make sure i don't mention renting out the rooms. Wow i need to look into that 5% down conventional mortgage. The main reason i was asking was because i want to purchase a house and live in the cottage in the backyard while i rent out the house. I wasn't sure if this went against FHA regulations

Logan Allec · Answer

@Marlon Persaud, yes, but of course you get to deduct expenses against that income as well.

Nicole A. · Answer

@Johnny Lujan I had just a standard mortgage loan requiring 5% down. I didn't go with the FHA because it had too many silly rules I didn't want to deal with...a small example being they wanted a railing on two steps before they'd finance the house. Secondly, regardless of the loan type, you need be approved on your own income. Don't even bring up the fact you plan to rent out a room. You need to be able to afford your home on your own income without roommates. When you close on the house, just put an ad out for the room.

Johnny L. · Answer

What kind of financing are you using to purchase the house? Just curious because I'm considering the same thing.

Marlon Persaud · Answer

Thank you that is good to know.

Nicole A. · Answer

Yes, any income you make from rent--regardless if you live there too or not--should be reported when you do your yearly taxes. Also know, if you rent out rooms in your personal home, you can write off repairs (as well as the usual improvements).

Ramar Price · Answer

As far as i know, yes cause the house is going to be in your name

Do I have to pay taxes on rent from roommates?

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