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I have a renter who will start occupying my second home in January. He will provide checks for the first and last month in December.

The IRS states that income should be reported in the year that I receive it.

However, the renter has not occupied the house at all this year. In that case, the IRS also states that the house is treated as a second home (because it was rented less than 14 days).

But if I receive the income now, how does that work?

  • I'm thinking about this question more carefully, after editing the title, and I'm wondering: Are you concerned more with how/when the income is to be reported, or more with the potential classification of the house as a "second home" (and the resulting deductions)? – Chris W. Rea Dec 29 '11 at 13:30
  • Yes, if it is a second home, and it is not actually rented for any day, I don't think there can be any deductions, even if I spent the whole of December renovating the place. – Krish Dec 29 '11 at 16:04
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The income should be reported in the year received. It doesn't matter how you define the property (the taxation on renting a second home is different and may not be in your favor, consult a CPA).

Refer to IRS.gov - Rental Income and Expenses - Real Estate Tax Tips. Quote:

Advance Rent

Advance rent is any amount you receive before the period that it covers. Include advance rent in your rental income in the year you receive it regardless of the period covered or the method of accounting you use.

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    I know this rule. The question is: How does it work in conjunction with the 14-day rule, which states that if it is rented less than 14 days, you do not have to report it? – Krish Dec 29 '11 at 16:05
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    @Krish you may not have to report it as schedule E, but you have to report the income. – littleadv Dec 29 '11 at 21:01
  • Are advanced checks actually income received? I would have assumed they aren't income until I take them to the bank and cash/deposit them. Until then, they're just paper - especially if they're post-dated. – corsiKa Sep 27 '14 at 5:51
  • @corsiKa you can assume whatever you want, but since the decision of whether to deposit them or not is yours - from legal perspective you received the money. Whether you cashed them or not is entirely irrelevant. – littleadv Sep 27 '14 at 6:30
  • @littleadv The decision to deposit them is not yours. A check is not valid until the date written on it. At least where I am (in Canada). – corsiKa Sep 28 '14 at 3:34

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