FHA house, Room Rental Income

[Christopher Carbonel]

Do I need to declare my rental income when I file for tax? What are my options? 

My other question is, we are planning on saving all our rental income to acquire another property. When the time comes that we are financially ready for another property, is there going to be an issue if our funds came from our FHA room rental income?

[Nicole Marshall]

To answer your first question, yes, you need to declare rental income on taxes. There are plenty of threads on the forum that go over this. I use TurboTax to do it, but if it's your first time, you'd likely want to hire a CPA to accurately report everything.

I don't know for sure, but I would assume if you reported the income on your taxes and you had no fine print in your FHA documentation preventing you from renting out rooms, then you should be fine to use that money for another property. Your best bet is to properly document everything. I deposit my room rental income into a separate account (vs my normal checking account) and I do NOT accept cash from my roommates. I make sure they send me rent through something traceable.

Hope that helps. Good luck!