Losses from Sublet Income

[authenticroadkil]

How should I handle sublet income (where I am not the property owner of the unit)? In some months, I  made a profit and in others I lost money.

Should I just report the net profit after paying the rent for the year?

For example: 

January 2025

Rent Owed: $1000

Rent Income from Sublease: $1500

Net Profit: $500

February 2025

Rent Owed: $1000

Rent Income from Sublease: $500

Net Loss: $500

Would I report net income to be $0 or would I just report the $500 net profit/income?

[Vanessa A]

You would just report the total net profit of $500.  This would be reported as other income on Schedule 1 line 8z. 

To do this in TurboTax select the following:

1. Federal
2. Income
3. Less Common Income
4. Miscellaneous Income
5. Other Reportable Income

[authenticroadkil]

Thanks @Vanessa A . So even tho for the year I netted $0 for the year, I would still just report just the months I gained income and not the money I lost?

[ThomasM125]

In your case it seems your excess rental expenses above the amount of your rental income are not deductible as rental expenses. Assuming you used the property for personal purposes more than 14 days or 10% of the time it was rented, whichever is greater, you cannot deduct your rental expenses that are more than the rental income. The IRS considers the property to be a personal asset as apposed to a rental business, which limits your rental expense deductions.

[authenticroadkil]

Thanks @Vanessa A @ThomasM125 wouldn't I would report the rental income of $2000 and rental expenses of $2000, effectively making it $0 tax liability? I did not live in the unit at all during the year and sublet it the entire time (but am not the owner of the property). 

Why would I report just the months I made a profit and not account for the losses? 

[ThomasM125 · Accepted solution]

Since you didn't use the property for personal purposes, you should report the rent income and deduct all rental expenses for the months you were either renting it or actively involved in seeking a tenant. Since you didn't use it for personal purposes, you can deduct all rental expenses, not to be limited by rental income.