Gross rental income refers to the total income generated from renting out property before any deductions or expenses are subtracted. This includes all amounts received from tenants for the use of real estate, such as:
- Base Rent: The regular payment received from tenants for occupying the space.
- Additional Fees: Any extra charges, such as late fees, pet fees, or parking fees.
- Utilities Paid by Tenants: If tenants are responsible for paying utilities directly, those payments typically do not count as gross rental income. However, if the landlord charges the tenants for these utilities and collects them as part of the rent, they can be included.
- Lease Payments: Income from leasing the property for a specified period (as in long-term leases).
- Rent Increases: Any increases in rent during the lease term that are received from tenants can be included in gross income.
- Security Deposits: Generally, security deposits are not considered income unless they are kept by the landlord and not returned to the tenant.
It's important to note that gross rental income does not account for expenses like property management fees, repairs, property taxes, insurance, or mortgage payments. Those expenses will be deducted to determine net rental income, which is often what's reported for tax purposes.