For some, this sounds a lot like the superintendent or resident manager who performs a number of roles and lives on premises. Last year, the Tax court once again determined that bartering the services of a handyman in exchange for rent was taxable. A handyman had traded work for the rent he owed his landlord and was required to pay tax on the value of the work performed that was applied to his rent. So why would it be different for your superintendent or resident manager?
This falls under the convenience-of-the-employer exclusion; thus, an employee may exclude from gross income the value of lodging provided free by an employer only if the employer does so for a substantial non-compensatory business reason. It must occur on the business premises, which works well with the New York City requirements for an on-site person within close proximity to the property. The key is that the housing is for the employers, rather than for the employees’, convenience and the employer must require the employee to accept the housing as a condition of employment. Thus, in order to satisfy local and Federal Taxation laws, the employee must need to “live in the lodging to be able to perform the duties of this employment.” This allows for your board to provide a wonderful quality of life to the owners.
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