Rental Income

[j0rdanah]

I have been renting my home for a period of 5 months now (August 2022-December 2022). My home is in Hawaii but I am currently residing in Texas. I am scheduled to pay Hawaii's state General Excise tax at the end of the year. Will I need to report that income in my Federal taxes? Can this be considered as a new business, if so what expenses may I claim?

[Anonymous]

@j0rdanah thank you for participating in our event.

Yes, you will need to file an HI nonresident state income tax return to report your HI rental property activities.

According to the HI Department of Revenue, every individual doing business in Hawaii during the taxable year must file a return, whether or not he or she derives any taxable income from that business. Since you are paying a HI GE tax, you are considered to be "doing business" in HI. You will be able to claim these HI GE taxes as a rental expense on Schedule E.

A landlord is allowed to deduct any reasonable expenses used in the conduct, maintenance and managing of her rental properties. That includes:

• Utilities
• Taxes
• Necessary and reasonable repairs to the property
• Travel costs incurred while doing business

Here is a helpful article with more information:

Rental Property Deductions You Can Take at Tax Time