Posted in Blog  
  on Feb 14, 2014

Examples of Landlord Tax Evasion

If you’re new to rental property investment, you should be aware of the different issues about taxation of rental income. Any landlord should not think that he/she can actually get away from not declaring income tax. Tax evasion is one of the most serious crimes with heavy penalties and may even lead to jail. More and more cases of rental income tax evasion by landlords are being reported. Thus, as a landlord, if you don’t want to be penalized, you should be responsible enough in paying your income taxes and liabilities.

What is Tax Evasion


What really is tax evasion? Well, tax evasion is an illegal practice in which the landlord intentionally avoids to pay his/her tax liability. Those who are caught for evading taxes will be subject to substantial penalties and criminal charges. There is, however, quite a distinction between tax evasion and tax avoidance or minimization. All landlords have a right to lessen the amounts of their taxes but it should be in accordance to legal means.

Factors to Consider About Tax on Rental and Property Income


• Learn about how gains from your rental property is being taxed.
• Know more about allowable expenses.
• Claim a tax relief if you are renting out any room in your home.
• Taxes on foreign properties and furnished holiday lettings.



Regardless of what country your rental property belongs, as a landlord, you are legally responsible for filing a tax return every year, to declare your rental income honestly, and to pay the tax due. Deliberately or intentionally falsifying your declaration, or hiding your incomes and assets constitutes tax evasion. While many landlords commit such tax evasion intentionally, there are also others who commit tax evasion out of negligence and ignorance of the law.

Rental Income Tax Evasion


If you are renting out your property to tenants, you should definitely report your income to the IRS on tax return. The IRS rules and regulations require all landlords to reports the received rental gains every year, including the advance rents they receive like cases in which they demand ‘first and last month’ rent. However, you don’t have to report security deposits as income.

What About Deduction?


As the landlord, you can actually deducts lots of expenses that are related to your rental property such as costs of hiring some contractors, repairs, maintenance, home improvements loan interests, as well as business travels.

Consequences Of Tax Evasion


While it is really tempting for you not to claim or report your income, particularly if you are just renting out 1 or 2 rental apartments, but this is surely a very risky practice. If IRS will find out about this especially about extra income, the agency will get you to pay for penalties and back taxes. It is your utmost responsibility to pay your taxes, being an honest tax payer you will be able to prevent and avoid unwanted experiences like being filed with tax evasion cases. And this is the last thing you would want to experience right? Thus, you should definitely know all about the complex law of rental income tax evasion.

Related

The Landlord Tenant Board: What it is and When it is Needed

Many times, there are issues between a landlord and a tenant that need to be resolved but are failed to do so, because both parties have gone too far with their actions, and have retaliated in the... More


How to Create a Residential Lease Agreement

Where there is a landlord, there will also be a tenant, and it is no surprise that these two parties can only work together once there is some sort of agreement, contract or a binding deal in place.... More


The Best Sites for Rental and Lease Agreement Templates

Many landlords find it difficult to write and draft a lease agreement. Since every State has its own general template, it can also be difficult to make sure your lease agreement meets all the criteria... More


The Best Landlord Associations for Landlords to Join

If you’re a landlord and want to manage your business in a better way, you should endeavor to get in touch with those industry experts who have the experience and the skills to help you do it. This is... More


Unpaid Rent

When you talk about the most common disputes arising between landlords and tenants, nonpayment of rent has to be there in the list. People rent their properties to earn money, and when a tenant... More


Section 8 Landlord Pros and Cons

If you have ever rented a living space and have had to move many times, you’d already know how difficult it is to find decent, affordable and secure living premises. A person has to deal with the same... More


Landlord Inspection Checklist: Rights, Letters, and Reports

Landlords across the state have the prime responsibility to make sure they inspect and up keep their property once they have rented it to the tenants. Inspections can occur monthly or yearly depending... More


Landlord Maintenance Costs and Responsibilities

Everyone knows that a landlord’s job is not easy. These folks have specific duties and responsibilities that they must perform in order to be fair. Being a landlord is not a position but it is, in... More


When to Withhold Tenant Security Deposit

Asking for a security deposit is quite common in property dealings. The reason to ask for a security deposit is to have something that would help a property owner recover some of their financial... More


How to Report Bad Tenants

Bad tenants are the worst-case scenario for any landlord; no one wants them, and if someone has them, they want them out in any way possible. There are times when landlords try as much as they can to... More