| Unfortunately, the hopes of renters are dashed: there | | | | you rent an apartment for $800 a month, and rent it |
| isn't a federal rent tax deduction. The good news? | | | | out to someone else for $1000 a month. Your income |
| The reason there isn't a federal rent tax deduction is | | | | from this is $1000 per month, but you can deduct $800 |
| that there isn't one because it would be redundant! If | | | | per month and only pay $200 per month (which is |
| the owner of an apartment complex has borrowed | | | | good news: without the deduction, you'd probably lose |
| money to buy it, the standard interest tax deduction | | | | money). |
| normally applies. And since apartment owners are | | | | Security deposits are tax free, unless they're forfeited. |
| competing with one another for tenants, that tax | | | | That's actually great news for renters! Think of it from |
| saving gets passed right along to apartment dwellers. | | | | a landlord's perspective: if they're in the top tax |
| So you don't see the money melting off your taxes | | | | bracket and take a three-year deposit up front, they're |
| owed, and coming back to you as a check from the | | | | actually going to owe a month's rent worth of tax |
| IRS. But it's still yours, in effect; the only difference is | | | | liability - for money they can't touch! |
| that you're not the one doing the paperwork. More | | | | Even if you're not a homeowner and don't get any |
| good news? Even though there isn't a federal rent tax | | | | federal rent tax deduction, there's still hope! A good |
| deduction, there are plenty of other ways you can | | | | online tax preparation company can find plenty of tax |
| save money on taxes thanks to rent. | | | | deductions for you, even if you can't get a federal rent |
| There are state rent tax deductions, but they vary | | | | tax deduction, there are lots of tax deductions you can |
| from one state to another. There are also different | | | | get. You might get state tax deductions, or deductions |
| terms for different deductions: some are capped, | | | | aimed at commuters. Missing a federal rent tax |
| some are not, some apply directly to income, and | | | | deduction isn't the end of the world by any means. |
| some reduce taxes directly according to a formula. | | | | Tax preparation is complex, but there's no reason to |
| Although state income taxes are generally lower than | | | | worry about the tax rules that aren't there - the ones |
| federal income taxes (so this isn't as good as a | | | | that exist are enough to keep anyone busy. Your rent |
| federal rent tax deduction), it's still something. | | | | might be a burden, but the hidden rent deduction still |
| You can get a federal rent tax deduction, if you are | | | | helps you out, even if it never shows up on your 1040. |
| renting to rent to someone else. For example: let's say | | | | |