Renting out a second home
Renting out a second home? How do the taxes work?
By renting out your second home for money you become a landlord. First off, you must pay taxes on the rental income, but the benefits of the additional income you get when you are not using the home are pretty exciting. You should first consider whether you want to actually rent out your second home. Do you want to rent it out to everyone or just family? Do you want to arrange it yourself or join an over-arching rental organization?
Tax information about renting out a second home
Rental income from a second home is taxable, and you should indicate this income on your tax return. Deposits are not considered as income if you plan on refunding them to the tenant. However, the deposit will be seen as income when the tenant breaks the lease, because this means you get to keep the deposit. Bartering agreements should also be indicated. In that way, you can have someone stay in your second home
in exchange for babysitting or other services. In this case, you must specify a fair and comparable market price for the services provided.
Although you have to pay taxes on the rental income, renting out a second home also has tax benefits. It is possible to subtract many of the expenses you incur for upkeep and maintenance.