Should people renting out rooms for profit be exempt from tax under homeowner deduction? (rating, money)

[kyle242]

I live in Bay Area and recently have been hunting for rooms. Some people not just set flat price, but inform you of a "bidding war" and if you offer them offer price they posted on craiglist to lure your interest you most likely won't get the room.

[Driller1]

Originally Posted by kyle242

I live in Bay Area and recently have been hunting for rooms. Some people not just set flat price, but inform you of a "bidding war" and if you offer them offer price they posted on craiglist to lure your interest you most likely won't get the room.

I would rather be taxed.

That would mean write offs from the income.

I would always come out ahead.

[spankys bbq]

I imagine competition for rented rooms can be fierce in a desirable area. Shouldn't they be paying income tax on that rent anyway? Or some sort of tax?

Do you know people are actually generating a profit rather than just trying to stay afloat? I've seen a lot of people trying to rent a room just to keep up with their mortgage payments, or in the case of my hometown, the tax increases many people saw a few years ago. Some were dramatic increases to say the least.

[doc1]

Supply and demand dictates prices and sometimes a bidding war happens. Nothing wrong with that.

I would imagine they should declare it as income but personally, I wouldn't make that any of my business.

[Bulldogdad]

They arn't and why are you asking?

[kyle242]

Originally Posted by spankys bbq

I imagine competition for rented rooms can be fierce in a desirable area. Shouldn't they be paying income tax on that rent anyway? Or some sort of tax?

Do you know people are actually generating a profit rather than just trying to stay afloat? I've seen a lot of people trying to rent a room just to keep up with their mortgage payments, or in the case of my hometown, the tax increases many people saw a few years ago. Some were dramatic increases to say the least.

If you aren't aware, California has prop 13 tax cap on homeownership tax. So no, I do not think more money goes to gov, but to people who you rent rooms from. It could be for renovation, but often times I feel it is just for their secondary income.

[Bulldogdad]

Property tax and income tax are two different things and can arise from the same piece of property depending on what you do with it.

[kyle242]

Originally Posted by doc1

Supply and demand dictates prices and sometimes a bidding war happens. Nothing wrong with that.

I would imagine they should declare it as income but personally, I wouldn't make that any of my business.

In San Francisco I would understand, but this happened in Fremont. I did not go for it, because it is not as "hot" as Berryessa neighborhood in San Jose in which I saw rents higher but I am more willing to spend money there. Fremont is kind of a black hole but not too bad.

[kyle242]

Originally Posted by Bulldogdad

Property tax and income tax are two different things and can arise from the same piece of property depending on what you do with it.

I see. What if those people don't declare income tax. They could be collecting rent in cash and never declare it

[Driller1]

Originally Posted by kyle242

I see. What if those people don't declare income tax. They could be collecting rent in cash and never declare it

Get a receipt for anything you pay for.

What they do is their business.......not yours.