End of 2017 deposit payment for 2018 tenancy

[mogwai]

I have a rental property. I had tenants starting their lease Feb 1, 2018, but they paid their deposit + first-month rent on 12/27/2017. Should this deposit + first-month rent income have been reported on 2017 taxes or is it okay to include this as part of 2018 tax submission?

[HelenaC · Accepted solution]

No, for income tax purposes, it's not okay for you to include the first month's rent in your 2018 income since rent is taxable in the year the money is received (assuming that you are a cash basis taxpayer). You received the money in 2017.

• The Security Deposit is not income and is not taxable. You generally have to give the Security Deposit back to the tenant once they vacate the unit. If you keep all or a portion of it, you'll then claim it as income.

Related information:

• How do I amend a 2017 return in TurboTax?

[TuckerdogAVL]

I have a similar situation only backwards. I work as a freelancer and I billed the client $1750 on 12/30/2017. I deposited the money on 1/4/2018. His accountant is showing I was paid that extra $1750 in 2018, but I showed that income from invoices on 2017. Now what?