Lease cancellation payment from a tenant
Varies
Can You Write Off Lease Cancellation Payment From a Tenant?
Short answer: Yes, it's taxable: a fee a tenant pays to break the lease early is rental income in the year received.
Pub 527 treats anything you receive for the use of the property, in cash or in kind, as rental income in the year you get it.
Records to keep: Keep leases, receipts, a log of repairs vs improvements, mileage to the property, and closing statements.
Lease cancellation payment from a tenant
Varies
Real Estate / Landlords / Property Managers / Agents
Yes, it's taxable: a fee a tenant pays to break the lease early is rental income in the year received.
Business justification
Yes, it's taxable: a fee a tenant pays to break the lease early is rental income in the year received. Pub 527 treats anything you receive for the use of the property, in cash or in kind, as rental income in the year you get it.
Category
- Rental Property Write-Offs