Question about self employment taxes in retirement

Question

I am thinking of retiring. I have about $10,000 a month income off of my rent houses. But will I have to pay 15.3 percent self employment tax? If so, I ain't retiring!

Answer 1

If you have been declaring your income from the rentals on Schedule E like those of us who have a rental house or two, you won't have to pay self-employment tax.

If you have been declaring your income from those houses on Schedule C, usually because you are a "real estate professional" (someone whose career is buying and renting out property), then yes you will have to continue to pay self employment taxes like you have been when you file your Schedule SE with your Schedule C.

Answer 2

NORMALLY, no.  Rental income is NOT considered to be self employment income, unless you're somehow providing "significant services", meaning that you'd be managing them on a day to day basis...kind of like a part time job.  But if all you do is rent them out and collect rents, and arrange for normal maintenance, there's no self employment here.

You'd report all of the income and expenses on Schedule E of Form 1040...which has no link to the self employment tax form.