Renting a property located outside of US always brings some
unique tax challenges. In my case, the tenant is responsible for utilities, per
rental agreement where we separated the monthly rent and the monthly utility
payment. However, the tenant does not pay to the utility companies directly, he
sends the utility payment to my account with the rent. I forward those utility
money to the utility companies, so I’m sure that utilities have been paid for.
The utility company sends me a settlement bill once a year, based on the
utility meters. At that time I forward the bill to my tenant and return him
whatever he overpaid, or I ask him to pay extra if he underpaid on utilities.
The question is: Shall I report those tenant utility payments passing through my
account as my income and my expenses? I’m in the opinion that it is tenant
money just passing through my account and I either pay them for the tenant or
return them back to the tenant, so it should NOT be reported as my income nor my
expense and they always net zero at the time of the annual settlement bill,
which I can prove with my record keeping. Similarly to security deposits that
are also not reported as income when received nor expense when returned back to
the tenant. Can somebody confirm?
