Skip to Content

Utah Tax Laws For Rental Income

A good property management company can help you manage your rental income. Taxes can especially be a headache when renting out your own house. With the help of Real Property Management Southern Utah, you can get some guidance for this confusing process.

Imagine purchasing a home to live in for several years. After getting married, you might move into a new, bigger home to better accommodate your bigger family. Rent prices in the area are starting to climb while the housing market is going down, so you decide that it’s worth renting out your existing home to a tenant instead of selling it to another buyer. However, if you’ve never been a landlord before, you might not know the rules about reporting your rent to the IRS and whether any money you’ve spent on it can be deducted from your tax return.

Questions commonly asked by first-time landlords may include:

  • Can rental income be taxed?

  • When do I have to pay tax on rental income in Utah?

  • Can security deposits be taxed?

  • What can be deducted?


Can rental income be taxed?

Rental income is taxable, but not everything you get from your tenants qualifies. You can reduce your income by subtracting incurred expenses to prepare your property for rental. These are reported on Schedule E, Supplemental Income and Loss.


What taxes do I have to pay on rental income in Utah?

Generally, you have to report all income when you receive the money, even though the tenant may report it on a different year. For example, if you received money in December 2014 in advance for January 2015, this must be reported for the 2014 tax return.

If you’ve received a deposit for advance months of rent, then this is taxed as income for the year that you received the money. If you received services instead of rent, then you must value the service what its active worth, reporting it on your return again for the year that you actually received it.

Additionally, you are required to report any constructive income. These are funds that you can access even without taking possession of it yet. If your renters put their money into the inbox at the end of December, it still counts for that year, even if you wait until January to actually take the checks out and cash them.


Can security deposits be taxed?

If you intend to return a security deposit to your tenants upon the termination of the lease, then it does not count as part of your income. Deposits for the last month of rent remain taxable upon receiving them because these aren’t promises so much as actual rent payments.


What can be deducted?

Interest is often the top of the list for the biggest deductible. One example of interest that can be deducted include interest payments on the mortgage for the loan that was used to pay for the home. This includes loans that were used to improve the property or interest on a credit card that was used for rental activity services.

In the year that you pay for your home, its actual cost is not entirely deductible. Rather, a landlord would receive the cost by way of depreciation. This requires deducting part of the cost of the home over a period of years.

Repairs to the rental property can be fully deducted during the year that you made the repairs and paid for them. A good example of a qualifying repair would be replacing broken windows, fixing the plastering, fixing leaks, fixing floors and gutters, or repainting old, worn paint.

If you drive someone for specific rental activity, you’re entitled to another tax deduction for travel. When you drive out to deal with a tenant or drive out to get the tools for repair, you can deduct some expenses for local travel.

Finally, if you ever need to travel overnight as a result of rental activity, you are permitted to deduct your meals, hotel bills and your airfare, along with other relevant expenses. In fact, you can plan your trip such that you can make your deduction while still enjoying yourself legally. Be sure to properly document all of your travel expenses when traveling over long distances; the IRS often scrutinizes deductions claimed for overnight travel. Be aware that if you don’t have the documentation to prove yourself, you may end up needing to owe.


At Real Property Management Southern Utah, we can help you avoid tax traps when renting your home out. Check around for good property management companies Utah and you will find that we are the best.

The Neighborly Done Right Promise

The Neighborly Done Right Promise ® delivered by Real Property Management, a proud Neighborly company

When it comes to finding the right property manager for your investment property, you want to know that they stand behind their work and get the job done right – the first time. At Real Property Management we have the expertise, technology, and systems to manage your property the right way. We work hard to optimize your return on investment while preserving your asset and giving you peace of mind. Our highly trained and skilled team works hard so you can be sure your property's management will be Done Right.

Canada excluded. Services performed by independently owned and operated franchises.

See Full Details