Can I Claim Rent Payments on My Taxes?

by Wilhelm Schnotz

Although the Internal Revenue Service allows taxpayers to claim many expenses – medical bills, business expenses and even gambling losses – there are some costs that you just have to accept have no tax benefit. Your rent on a residential home or apartment is one of those non-deductible expenses. If you can tie those rent payments to a business activity they may qualify as a deduction, but the average residential renter will need to find other ways to cut his tax bill.

Taxes and Residential Dwellings

Because everyone needs a primary residence, the IRS doesn’t consider paying rent on a residential dwelling as unique enough to garner a deduction. While it gives homeowners slightly preferential tax treatment than renters, the tax code largely treats housing expenses the same across the board: Homeowners may claim the interest charged on their mortgage, but not the mortgage payment itself, as a deduction. Although mortgage finance charges can lead to a hefty deduction, homeowners are only allowed to claim finance charges, not housing expenses.

Business Property

If you’re paying rent on a property that’s used exclusively for business, such as office space, a retail pad or a warehouse, the IRS typically allows the business to claim its rent. You can claim any amount of rent paid, so long as it’s reasonable for the building and your local real estate market. In addition to rent payments, businesses may also deduct leasing fees, taxes incurred by the property or any charges that come with the cancellation of a lease.

Home Office Deduction

If you use a portion of your home as part of your business, you may be able to claim the home office deduction. To qualify, the portion of your home must be used exclusively for business – storing records in the corner of your living room or setting up your laptop on the kitchen table doesn’t trigger a deduction for the room. To calculate the deduction, determine the square footage of the room, and divide that figure by your house’s total square footage. This is the portion of your rent you may claim as the home office deduction.

Renting Out a Vacation Home

If you own a vacation home in addition to your primary residence and rent it out when you’re not using it, you may deduct certain expenses. If you use the home for more than 14 days or 10 percent of the days that it’s rented each year, the IRS treats it with rules that blend personal residences and business properties, and allow limited deductions. While you can’t claim any rent received through this situation, you may claim expenses, such as maintenance, homeowners’ dues and leasing costs as a deduction.

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