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Taxes of rental fee income
If we buy a condo to rent. How many taxes we should pay for the rental fee income? How to calculate the final income of rent? Should we except the condo fee and annual state taxes? For example: If the rental fee is $1500/m, condo fee is $400/m and taxes for condo is $200/m, the total income should we pay tax is $1500/m or $900/m? Thank you!
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You will report the revenue you receive from the rental and deduct expenses that you incur, so that you end up paying income taxes on your net income, which you can think of as profit. In your example the net income would be $900/month. But you would probably have additional expenses for things like maintenance and depreciation which would reduce the net income even more. |
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It's great as long as you can deduct every expense you can think of - but then there's that fateful day when you owe a whopping capital gains tax on your income investment if you sell the condo (unlike if it were your residence). There are ways around that, but the IRS changes the rules from time to time. Currently it involves basically moving into the condo for 2 out of the last 5 years before selling.
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