Taxes for Renting Bedrooms

[Derek Luttrell]

Hi everyone, I closed on my first purchase about a week ago (house hacking through roommates), and today my roommate sent me their $900 rent for August via Venmo. 

Rookie question here, but what do I actually need to do to make sure I'm not breaking any laws with that money I receive every month? I know this is likely a better question for a CPA, but I figured I could get some preliminary knowledge on here. Venmo will be their payment method on the 1st of every month. 

Thank you! 

[Daniel Hyman]

@Derek Luttrell 

Congrats on your first purchase! 

As @Linda S. mentioned, rental income is reported on your tax return. Your taxable rental income is not the full amount of rent collected. Rather, it is the net profit, or income less eligible expenses (of the rental portion).  You can deduct all eligible rental expenses (including mortgage interest) using a proportionate ratio either by rooms or by square feet. So, for example, if your are renting out half of the house, and mortgage interest is $2K, then $1K can be deducted on Schedule E, and $1K on schedule A. Maintenance costs for the tenants portion are deductible, but not for the for the owner occupied portion. And the rental portion of depreciation is deductible as well. 

Congratulations again!