Question

If fair rent is around $1200 and I only charge $915 does that mean I say my property is not fair price?

Forum|Forum|5 years ago
April 20, 2021
2 replies
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TurboTax Premier Online

Employee

Probably not. There have been a few court cases where rent is held to be fair market price as low as 80% of actual rent in the area, but yours is below that.

Carl11_2

Employee

The IRS has no clear cut bottom line method for assigning a specific dollar limit to fair market price of anything. Basically, the fair market price consist of two parts.

1) The lowest amount the seller is willing to except.

2) The highest amount the buyer is willing to pay.

If you are willing to accept $915 a month for rent and the renter is willing to pay it, that's a fair market price. However, if you are renting to family and you will accept $915 a month rent "only" because they family, then you are not renting at a fair market price, since you would not accept $915 a month from an unrelated party.

T

TomD8

Employee

For what it's worth, HUD publishes "Fair Market Rents" every year for most areas of the country. You can do a search at this link:

https://www.huduser.gov/portal/datasets/fmr.html

The tax issue is that if your return is audited and the IRS determines that you are renting "not for profit", they may deny most deductions associated with that property.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.