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charging my son the rent below fair market value do i need to report gift tax

Forum|Forum|6 years ago
April 24, 2020
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I plan to charge my son who will live in my second home a rent below fair market value. I will charge him 600 dollars per month which is 600+ dollars below the FMV. I know this is a personal use, I will report the rent as other reportable income but not rental in my return. I will not claim any rental expense deduction. Do I have to report 7200 dollars in gift tax since it is under annual gift exclusion 15000 dollars? Does this sound right?

Best answer by MinhT1

Please refer to the IRS instructions. You report any rental income as Other reportable income on line 8 of Schedule 1 of form 1040. You cannot report a loss.

Mortgage interest and property taxes are reported as Itemized deductions on Schedule A if applicable.

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MinhT1

No, you do not have to report your deemed gift to your son as it is under the exception of $15,000.

On reporting your rental below Fair market value:

If you rent your property below fair market value, the IRS considers that you do not rent your property to make a profit. In this case, you can deduct your rental expenses only up to the amount of your rental income. You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year.

Mortgage interest and property taxes paid are claimed in Schedule A as for your residence.

Please refer to this IRS document, especially the section on Not Rented for Profit on page 16 on how to report income and expenses:

https://www.irs.gov/pub/irs-pdf/p527.pdf

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tchen2729Author

Does that mean I still report rental using turbotax without claiming property tax and mortgage interest, but I claim management fee, home owner association fee, repair an depreciation up to the amount I received from my son, is this right?

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MinhT1Answer

Please refer to the IRS instructions. You report any rental income as Other reportable income on line 8 of Schedule 1 of form 1040. You cannot report a loss.

Mortgage interest and property taxes are reported as Itemized deductions on Schedule A if applicable.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"