Family Member lives in my house, and contributes towards mortgage. Do I need to report that money as taxable income?

Forum|Forum|1 year ago
December 9, 2024
2 replies
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My sibling and I have been living together for several years. We used to rent, but I recently bought a home, and to avoid complications down the road, it is solely under my name.

My sibling still contributes towards utilities and the mortgage cost, though it is significantly less than what it would cost to actually rent a house like the one I own. Roughly 3x to 4x.

Do I need to report the money they give me as taxable income? It would really mess up both of our finances to have to make that switch.

Or is there a way to reconfigure how we do things? I've had people suggest doing a $1 lease, and then doing the rest as a family gift, which I guess would be legal, but feels like bending the rules to me.

Not A Product Question

Best answer by TomD8

The "family cost sharing" seems to be a key search phrase, I found another post of yours, Hal_Al.

Every day that you "rent" to a family member below FMV is considered a day of personal use by you. If you have 14 or more days of personal use, then to the IRS you no longer have a rental property. In that circumstance, if your family member helps pay some of the expenses, then you have a cost-sharing arrangement - not rent. Cost-sharing between family members is not taxable income to you. Your relative isn't paying you; he's paying his share of the bills.

xmasbaby0

Employee

Family cost sharing is not entered on a tax return.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

Hal_Al

Employee

Q. My sibling still contributes towards utilities and the mortgage cost, do I need to report the money they give me as taxable income?

A. No.

If this is merely a cost sharing arrangement where the amount paid is below fair market rental, there would be no reportable income to you. If the “rent” amount is fair market value, or more, there is still some question as to whether you even have to report it, as it almost always comes out zero. Most people take the attitude that it is not income; it's just room mates sharing expenses and ignore it. Family, as opposed to unrelated roommates, makes that position stronger.

AndPhotonAuthor

Your answer makes sense to me, but my previous research couldn't turn up a clear answer since I own the house, but also live in it.

If we were renting a house together, then it is clearly not taxable income. But since I am sort of a "landlord" receiving money from family to put towards the mortgage of my primary residence (though it is well below the fair market value) I couldn't find any trustworthy information sources. For NON-Primary residences, I could find information, but not for my exact situtation.

Do you have any sources that support your viewpoints? I am self employed, and my taxes are automatically heavily scrutinized, so I want to make sure I'm handling it properly up front!