Rental income (losses) generally refers to the income or loss earned from ownership of properties that are rented/leased to another person. Generally, rental income is income from property. There are a few exceptions where it would be considered business income, including:
- A corporation employing six or more full-time employees whose principal business is to earn rental income;
- A business with short-term rentals of small equipment;
- A motel, hotel, or similar hospitality business;
- Long-/short-term business of leasing movable property.
Generally, when we think of rental income we think of real property that is held by a landlord and rented/leased to a tenant. In fact, that makes up vast majority of rental incomes. Rental income, except in a corporation, is usually reported on a cash basis of accounting. Expenses typically include:
- Property taxes;
- Mortgage interest;
- Property management fees;
- Utilities; and
- CCA (restricted).