Hi! I’m a hairstylist and I have my own private studio. A friend wants to sublet my studio twice a week. How do I avoid paying taxes on her cut of the rent? I don’t want in to show as income because it’s not, it’s just part of then rent. I’m making no profit off of it. Thanks!
Hairstylist with a private studio looking to sublet
byu/Extension-Guard-356 intax
Posted by Extension-Guard-356
2 Comments
You can’t avoid it.
If your friend is paying a portion of your rent through a sublease, then you would deduct less rent expense.
If rent is $1,000 a month and your friends is going to pay $300 through a sublease, then you would only be able to deduct $700 off of your Sch C business taxes. If your friend is paying rent directly to you and you are still paying the entire $1,000, then you claim all $1,000 expense with $300 in income, giving you the same $700 expense. In this example, you would still have a net $700 expense. There really is no getting around that.
If your friend is subletting during a time when you are not using the space, then financially, you are still better off subleasing. I don’t see how the tax ramifications should influence your decision.
You each pay the landlord separately for your respective portions.