We are considering buying our first home, but it comes with a tenent that will live in the house until the end of the year. Until he moves out, we will charge him rent which will just cover the mortgage. Will his rent be considered rental income subject to taxes?

ANSWER

The BIDaWIZ Team's Answer:

The rent from the tenant will be considered rental income.  Whether or not it is taxable would depend on the amount of expenses you would be able to deduct from the rental income.

Allowable deductions would include the mortgage interest for the portion of the house for the months that the tenant is occupying the house, property taxes (allocated based on occupancy by the rentor and the owner), depreciation, water bills, and other expenses for maintaining the property during the time it is rented.