Tax season is here and you might be wondering what you can write off on your taxes.
You have most likely heard about the great tax benefits that homeowners enjoy, but as a renter, do you qualify for tax deductions as well?
Are you eligible for a home office deduction?
Are you self-employed and working out of your apartment? You may be able to claim a deduction on your taxes for your home office.
According to Tax Slayer “If you use a portion of your rental home as your principal place of business, you could be eligible for the home office deduction. The amount you can deduct depends on the size of your space and whether you choose the simplified or regular method to calculate your expenses.
“The simplified method lets you deduct $5 per square foot for up to 300 square feet. The regular method bases your deduction on the percentage of your home’s square footage used as office space.”Tax Slayer
Subletting could make you eligible for tax deductions
Subletting is a form of passive income and it’s pretty common (if your lease agreement allows it). If you’re subletting, you should keep in mind that you have to report all of your rental income on your tax return, but you are also entitled to rental expenses. Since you don’t own the home, you won’t be able to take a loss (even if your expenses exceed the income), but you will be able to reduce the income.
For example: if you rent a two-bedroom apartment and sublet one of the bedrooms to a roommate and the two of you share all the common areas. You could be eligible to deduct a portion of your housing expenses such as rent, renters insurance, utilities, and more.
See if your state offers a renter’s tax credit
Did you know some states offer a tax credit on your state income tax return for paying rent during the year? Not every state offers this benefit to renters, and those that do, often ask you to meet certain requirements. There is likely an income threshold you cannot exceed or additional limitations based on household size to qualify. To see what options are available to you in your state, we suggest consulting with a tax professional who can give you all the details about your state.
*We recommend checking with a tax professional before claiming anything on your taxes.*