Do I have to claim income if letting kids cover mortgage that is below fair market value (no profit) after moving out of state? Total amount is below gift limit of 18k.

Forum|Forum|2 years ago
February 17, 2024
1 reply
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No lease or rental agreement. No new home purchase. Home is our family home that we will go back to.

TurboTax Online

DianeW777

Yes. a 'not for profit' rental is not allowed a negative amount to off set other income. However you must report any and all income. Unfortunately, since the Tax Cuts and Jobs Act (TCJA) there is no deduction for the expenses.

The not-for-profit rental income is reported as follows and can be found in IRS Publication 527. (Page 25)

Where to report.

Report your not-for-profit rental income on Schedule 1 (Form 1040), line 8. If you itemize your deductions, include your mortgage interest and mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses from your not-for-profit rental activity when figuring the amount you can deduct on Schedule A.

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Click Federal in the left column
Click Wages & Income at the top
Scroll down to Less Common Income. Click Show more
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Roland11214Author

So the fact that they are relatives (children) in in a family home doesn't make a difference? Couldn't it be considered a cash gift since I'm physically paying the mortgage?

DianeW777

Yes, it's possible it could be a gift to family. In 2023, the annual gift tax limit was $17,000. For married couples, the combined 2023 limit was $34,000. This means each spouse (if applicable) can give $17,000 per person.

You should seek advice from someone knowledgeable about gifts and gift tax return requirements to be sure you have not gone over the gift limits.