Here's what the "Learn More" popup for Rental Income should say if was working correctly:
Rental Income
Rental income is any payment you receive for the use or occupation of property. It can be in the form of cash, services or other property.
Here are some rental situations and how they affect income amounts you might enter here:
Advance Rent
Advance rent is income when you receive it.
For example, if you accept new tenants and they pay the first and last month's rent, the last month's rent will be used for the final month they occupy the property. The last month's rent is considered advance rent and is taxable when received.
Security Deposit
A security deposit is considered advance rent if it is to be used as a final payment of rent.
However, if it is to be returned to the renter at the end of the lease, it is considered to be refundable and not income. If a tenant forfeits any part of a security deposit, that part of the deposit becomes taxable at the time it is forfeited.
Payment for canceling a lease is considered rent and is taxable when you receive it.
Tenant Pays Expenses For You
Expenses and repairs your tenant pays instead of rent are considered your rental income. However, you can deduct the costs as expenses.
For example, if you are away and the tenant pays for an emergency repair and deducts it from his rent, this is both income and a repair expense.
Tenant Provides Services
Property or services provided by your tenant are taxable as income at the fair market value, but you can also include that amount as a maintenance or repair expense.
For example, a tenant is a painter and offers to paint your rental property instead of paying two months rent. The two months rent amount is both income and an expense.
Lease with Option to Buy
If the rental agreement gives the tenant the right to buy your rental property, payments you receive under the agreement are rental income until the tenant exercises his option to buy. Unless the rental payments are applied toward the purchase price, payments made before the option is exercised remain rental income.
