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My son is renting a room while he is in school from a guy he knew in high school. My question is should he expect a receipt and is the fellow renting the room to him required to claim this money as income. I think the guy is just taking the money and has never even offered a receipt. This seems fishy to me. thanks
Tell your son to pay by check or M.O. and then then he has a receipt. But asking for one is certainly fine too. What the owner does with the money though, is not your concern.
My son is renting a room while he is in school from a guy he knew in high school. My question is should he expect a receipt and is the fellow renting the room to him required to claim this money as income. I think the guy is just taking the money and has never even offered a receipt. This seems fishy to me. thanks
State law would define your sons situation as "sublessor", when you rent a room in someones home and your sons friend is the landlord. I would definitely want a receipt if paying in cash, friends can become foes, it happens. With checks and money orders issues can still arise over late payments, if your sons friend enforces that and by most state law after the 5th is late, unless there is another verbal agreement between them. The date on the check or day the money order was purchased doesn't necessarily indicate the day an LL received payment, so having both are advisable.
If theres a deposit involved, in some states late payments can be deducted after moveout, I wouldn't leave any loopholes. Google Landlord/Tenant code for the state hes residing.
State law would define your sons situation as "sublessor", when you rent a room in someones home and your sons friend is the landlord. I would definitely want a receipt if paying in cash, friends can become foes, it happens. With checks and money orders issues can still arise over late payments, if your sons friend enforces that and by most state law after the 5th is late, unless there is another verbal agreement between them. The date on the check or day the money order was purchased doesn't necessarily indicate the day an LL received payment, so having both are advisable.
If theres a deposit involved, in some states late payments can be deducted after moveout, I wouldn't leave any loopholes. Google Landlord/Tenant code for the state hes residing.
Have to make correction in the above, your son is the "sublessee" the friend the "sublessor" same as a landlord.
When I rented I paid by check but always demanded a receipt. Checks can be lost and the LL may claim that you never gave him the check. That happened to me once. I was able to produce the signed, stamped receipt and let him know the lost check was his problem, not mine. They did eventually find it, but I wasn't about to cut him another one.
For quite some time I was in a rental home and rented out the downstairs studio to several people over several years. This was all a question of being able to afford the luxury of a nice house. I had a full time job and as neither did I claim the house rent as a deduction on my income tax did I declare the income from the rental as income. If your son's friend owns the home then he probably does declare the rent from the room as income but if in turn a tenant who's charging your son then probably not. But with all due respect that's really none of your business, unless your reason for asking is that you have a spare room you're thinking of renting out to someone else.
However, your son really must get into the habit of requiring a receipt for any money transferred in cash to another person and particularly where rent is concerned. There are simple receipt books available for that purpose and he can fill out a slip in duplicate every time he pays rent and have the landlord sign as acknowledgement of receipt.
Thank you for the info. My other question is do you have to report money that you get for renting a room as income?
My understanding is Income is reportable once a certain threshold is reached...
Generally, Rental Income is offset by expenses, depreciation and tax credits.
I have rented to tenants that have never filed a Federal Income Tax return... they received subsidized housing, AFDC, general assistance, etc..
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