Housesitting Taxable?

Hi. I am not a tax professional, so please excuse me if what I am asking is some sort of silly question...

Say that I accept to housesit somebody's property (house, pets, etc.) while they are on an extended vacation. I would live there rent- and utilities-free. No salary.

Would the IRS tax me for this?

Say that I also ask for free food and gas. Would things change with the IRS?

Reply to
tb
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Below is what Pub 525 says, which is the closest to a firm answer you are going to get. Various facts and circumstances would need to be known, and ultimately, if challenged by the IRS, the dispute could be resolved in court.

For example, if I were in a position to render a decision, I'd want to know the length of the stay, fair rental value (FRV) of the property, your relation to the owners, your obligation or liability to the owners for the condition of their property while they are gone, etc.

As for your second question, how are the owners going to provide you with "free food and gas" if they are not physically present? Wouldn't they have to give you money (or equivalent) instead, which you would be free to use for any purpose, not just food or gas?

Pub 525:

"Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. If you exchange services with another person and you both have agreed ahead of time on the value of the services, that value will be accepted as fair market value unless the value can be shown to be otherwise. [...]

"Example 4. You own a small apartment building. In return for 6 months rent-free use of an apartment, an artist gives you a work of art she created. You must report as rental income on Schedule E (Form 1040) the fair market value of the artwork, and the artist must report as income on Schedule C or Schedule C-EZ (Form 1040) the fair rental value of the apartment."

Reply to
Mark Bole

What is he giving them in exchange for the free rent? All he's doing is living there. The example in the IRS reg involves giving the landlord something of value instead of cash.

Is "house sitting" a service in and of itself? Are there professional house sitters? You'd need to determine a typical rate they would be paid for sitting a house of this type.

Most likely he would save his receipts, and they would reimburse him after the fact.

Reply to
Barry Margolin

[...]

Yes, and yes, of course. Why, there are even private security firms that will patrol your residence during your absence for a fee. It wouldn't surprise me at all if the homeowner's insurance has a clause or two about leaving the property vacant for extended periods, which alone would be a good reason for a homeowner to arrange for house-sitting.

He said there were pets to care for, too. There are professional pet-sitters and kennels that provide this service for a fee.

It would be different if the owners simply gave him a key and said, "feel free to drop in whenever you like for however long you like, or not at all, we don't expect anything in return". That would be a gift.

But he said he would "accept to house-sit", which sounds like an agreement to an exchange of value for service to me. And he is still considering negotiating for an increase in his "fee" by asking for additional reimbursement of personal (non-deductible) expenses. Since he would probably not have all the rights and privileges of a full-time tenant, maybe the value received would be something less than the FRV. But with the limited facts we've been given, I can't see under what part of "specifically excluded from gross income" this would fall, for either party.

Reply to
Mark Bole

Under section 119 of the Internal Revenue Code, meals and lodging given to employees may be excluded from taxable income if the meals or lodging is given for the convenience of the employer, and on the employer's business premises.

That provision appears to only actual employees. You would probably be considered a contractor, and the provision would not apply.

Reply to
Stuart A. Bronstein

I would keep the receipts for food and gas and then present them for reimbursement when the owner of the house comes back...

Reply to
tb

Sorry about the delay; I'm just getting back to checking this group. It looks to me that a house-sitter would be a "household employee", not an "independent contractor". Having hired an household employee in California, not specifically working as a tax professional, I am familiar with the requirements there. There would be no reporting requirement in California unless total cash paid to all "employees" exceeds $750 in a quarter, and no Federal reporting requirement unless gross income (not including the value of rent required as a condition of "employment", or meals, up to a statutory meal allowance) exceeds $1000 (for all "employees") in a quarter or $1900 (for a single employee) in a calendar year. (I cannot find in the publications whether the "rent" not subject to income tax, would be subject to Social Security tax. It was in prior-years versions of IRS publication 15-B. If state filing is required, it _would_ be subject to state employment taxes.)

It doesn't appear that there would be a problem for the original poster, in any case, even if the homeowner was required to file, and didn't. If you received gas money, that would be taxable, though.

Reply to
Arthur Rubin

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