You can become a small business owner by converting property you own to rental property. If you are considering doing this, familiarize yourself with the tax differences for commercial property. You will find a host of new tax obligations as the owner of rental property, and you will discover many benefits you do not have if you don’t currently rent out property. Learn the tax benefits and drawbacks to converting to rental property.
Any money you collect as rent is taxable as income. This means you not only need to cover your mortgage payments and repair expenses when you set rent amounts, you must cover your income taxes. You will report rental income on Schedule E and attach it to your tax return. Do not count security deposits as income, unless you keep a part of a deposit as compensation for a tenant who leaves before satisfying his lease obligation. Read More