When we rent a new location we pay amount to previous renter in which income statement that amount will be and in which category?

Most individuals operate on a cash basis, which means they count their rental income as income when it is actually or constructively received, and deduct their expenses as they are paid. Some specific types of income are:

• Amounts paid to cancel a lease – If a tenant pays you to cancel a lease, this money is also rental income and is reported in the year you receive it.
• Advance rent – Generally you include any advance rent paid in income in the year you receive it regardless of the period covered or the method of accounting you use.
• Expenses paid by a tenant – If your tenant pays any of your expenses, those payments are rental income. You may be allowed to deduct the expenses if they are considered deductible expenses.
• Security deposits – Do not include a security deposit in your income if you may be required to return it to the tenant at the end of the lease. However, if you keep part or all of the security deposit because the tenant breaches the lease by vacating the property early, include the amount you keep in your income in that year. If you keep part or all of the security deposit because the tenant damaged the property and you must make repairs, include the amount you keep in that year if your practice is to deduct the cost of repairs as expenses. Do not include the amount in income if your practice is not to deduct the cost of repairs as expenses to the extent the security deposit reimburses those expenses. If the security deposit is to be used as the tenant's final month's rent, you include the money as income when you receive it, rather than when you apply it to the last month's rent.

Some examples of expenses that may be deducted from your total rental income are:

• Depreciation – You begin to depreciate your rental property when you place it in service. You can recover some or all of your original acquisition cost and improvements  (to report depreciation) beginning in the year your rental property is first placed in service, and beginning in any year you make improvements or add furnishings.
• Repairs – Repairs just keep your property in good working condition but do not add to the value of the property.
• Operating Expenses
• Uncollected rents – If you are a cash basis taxpayer, you cannot deduct uncollected rents as an expense because you have not included those rents in income.

AGREE WITH MR VENKITARAMAN 

whatever you pay for new location will be considered as expenses and will appear in profit and loss statement.

Place the old tenant enters into account Accrued expenses and unpaid 

Pay rent for the new place prepayments