Investors & landlords

JavierG · ‎May 31, 2019

If you collect rent from someone who lives in a property that you own – even if it's just a room in your house – you're considered a landlord and must report the rent you receive as taxable income.

The rent is considered income in the year you received it, even if the rent covers a time period in a different year. In other words, your tenants' rent payment for January of 2014 collected in December of 2013 gets reported on your 2013 return, but a 2013 rent payment that wasn't received until 2014 is reported on your 2014 return.

To offset your rental income, the IRS lets you deduct expenses and depreciation related to the rental. We'll show you how to enter both your rental income and expenses below.

Entering rental income and expenses

For tax year 2014, you'll need TurboTax Premier or TurboTax Home & Business to enter rental income and expenses. These versions support the Schedule E you'll need to report rental property.

First, if your rental property is located out-of-state, do this before entering your rental-related income and expenses:

Open your return.
Select Personal (Premier edition) or Personal Info (Home & Business edition) and continue to the Your Personal Info Summary screen.
Scroll down the Personal Info Summary screen until you see the Other State Income.
Click on the Edit/Update button next to Other State Income.
On the Did (Either of) You Make Money in Any Other States? screen, make sure you checked the box next to Yes, we made money in states other than <yourstate>.
Select the state your rental property is located in from the drop-down list, then click Continue.
If your rental is located in Alaska, Florida, Nevada, South Dakota, Texas, Washington, or Wyoming, leave No Entry in the drop-down and click Continue.

This step ensures TurboTax sets up your state programs correctly when it comes time to file your state taxes. (In most cases, you'll need to file a nonresident return for out-of-state rental property. For more details, refer to Nonresident State Tax Returns)

Now let's enter your rental income:

Select Federal Taxes (Business in the Home & Business edition).
In Online TurboTax Premier, click the bars at the upper left corner to show Federal Taxes on the selection list; enlarge the screen if needed to show the left side selection list. If you don't see the menu bars, you must first step through each of the interview screens in TurboTax.
Select Business Income and Expenses and in the next screen, click I'll choose what I work on.
On the Your Income Summary screen (TurboTax Premier edition) or the Your Business Income screen (TurboTax Home & Business edition), scroll down to the Rentals and Royalties group.
Click Start/Update next to the Rentals and Royalties line and step through the rental interviews to the Your <name> Rental Summary screen.
If you have more than one rental entered, select the out-of-state property.
Click the Start/Update button next to each topic on the Your <name> Rental summary screen to enter your rental income, expenses, assets, depreciation, and vehicle expenses.

When finished, click State Taxes to get started on your state tax return(s). Don't forget to file a nonresident return if your rental property is located in a state that collects income tax.

Tip: Prepare your nonresident state return(s) before your resident return so that TurboTax can properly calculate the credit for taxes paid to another state.

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