Tax season is here, and if you’re a renter, you might be wondering whether there’s anything you can actually write off. While homeowners tend to get most of the tax-time spotlight, renters do have a few potential deductions and credits worth knowing about. Here’s everything renters should know before filing.
Home Office Deduction for Renters
If you’re self-employed and work out of your apartment, you may be eligible for the home office deduction—even as a renter.
To qualify, the space must be:
- Used regularly and exclusively for business
- Your principal place of business
If you meet those requirements, the IRS allows two calculation methods:
Simplified Method
- Deduct $5 per square foot
- Maximum of 300 square feet
- Maximum deduction: $1,500
Regular Method
- Deduction is based on the percentage of your apartment used for business
- Allows you to deduct a portion of eligible expenses such as rent, utilities, renters’ insurance, and internet
The simplified method is, well, simpler. The regular method requires more record-keeping but can result in a larger deduction for some taxpayers. As always, documentation is key—keep records of your square footage, expenses, and business use.
Subletting and Tax Deductions
If your lease allows it, subletting can open the door to both taxable income and deductible expenses.
Here’s how it works:
- Any rent you collect from a subtenant must be reported as income
- You may also deduct eligible rental expenses related to the portion of the apartment being sublet
Because you don’t own the property, you generally can’t claim a rental loss if expenses exceed income. However, you can reduce the taxable income by deducting allowable expenses.
Example:
If you rent a two-bedroom apartment and sublet one bedroom while sharing common areas, you may be able to deduct a portion of:
- Rent
- Utilities
- Renters insurance
- Internet and other shared services
Deductions are typically calculated based on the percentage of space rented to the subtenant.
State-Level Renter Tax Credits
While federal deductions for renters are limited, some states offer renter tax credits or deductions on state income tax returns.
These programs vary widely by state and often depend on:
- Income level
- Household size
- Amount of rent paid
- Age or disability status, in some cases
Not every state offers a renter credit, and eligibility requirements can change from year to year. A tax professional can help determine whether your state offers this benefit and whether you qualify.
Other Renter-Related Tax Considerations
While rent itself is not deductible on a federal return, renters may still benefit from:
- Energy-efficient tax credits if you purchased qualifying items (like certain appliances)
- Education credits
- Self-employed business expense deductions unrelated to housing
- Moving expense deductions (limited to specific military situations)
These aren’t renter-specific, but they’re often overlooked and can still impact your return.
Tax rules can change, and eligibility depends heavily on individual circumstances. Before claiming any deductions or credits, it’s always best to consult a qualified tax professional who can provide guidance based on your specific situation.
*This post is for informational purposes only and should not be considered tax advice. We recommend checking with a tax professional before claiming anything on your taxes.*
Frequently Asked Questions for Renters
Can renters deduct rent on their federal taxes?
No. Rent payments are not deductible on federal income tax returns. However, some states offer renter credits or deductions.
Can W-2 employees claim a home office deduction?
Generally, no. The home office deduction is limited to self-employed individuals, independent contractors, and business owners.
Do I need a separate room for a home office deduction?
Not necessarily, but the space must be used regularly and exclusively for business. A desk in a shared living area typically does not qualify.
Do I have to report money from a roommate or subtenant?
Yes. Any rent you receive must be reported as income, even if it’s informal.
Should I keep receipts?
Absolutely. Keep documentation for rent, utilities, insurance, internet, and any other expenses you plan to allocate.