Question

Rental to family

Forum|Forum|3 years ago
January 17, 2023
2 replies
0 views

We're renting to family for only 30% of fair market rent. I understand this would not be considered income because it's only covering mortgage and taxes.

Mother in law is on a fixed income and elderly.

Can I report a loss? And what about depreciation?

Thank you. 😊

Not A Product Question

A

Anonymous_

Employee

Every day you rent to a family member (or actually anyone) at below fair rental value is considered to be a day of personal use.

As a result, your deductions are limited to mortgage interest and real estate taxes which, themselves, are subject to limitations. You cannot report a loss nor deduct depreciation, but you still need to report the rental income.

T

ThomasM125

The money you collect for rent is considered income, so you need to report it on your tax return as rental income. You can deduct expenses associated with the rental income on a pro rata basis taking into consideration the personal use limitations as mentioned by @Anonymous_. Thus, you may not have taxable income if your allowable expenses are not less than your rent income, but both should to be reported on your tax return.

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