Question

If I rented part of my home at less than fair rental value to a non-relative, can I now use the full mortgage interest and property tax amounts in schedule A?

Forum|Forum|7 years ago
June 5, 2019
1 reply
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If I rented at fair market value, the rental portion of the mortgage interest and property taxes would go on schedule E and the personal portion of the mortgage interest and property taxes would go on schedule A.

Since I rented well below fair market value, none of my rental expenses will be deducted.

M

MichaelDC

Employee

Yes, you can use the full mortgage interest and property tax amounts on Schedule A. (See below.)

When you rent below fair market price, you would be considered to be renting "not for profit."

If your expenses (mortgage interest plus property taxes) were more than the rent you received, you are not required to report the income.

Otherwise, the rental income for this period is reported as Miscellaneous Income in the Less Common Income section at the bottom of Wages & Income.

If this is a "second home", property taxes and mortgage interest may be included as Itemized Deductions (Your Home under Deductions & Credits).

If the rental income exceeded the property taxes and mortgage interest for the property, you may deduct additional costs associated with the house as miscellaneous itemized deductions (Other Deductible Expenses under Other Deductions & Credits). The total of property taxes, mortgage interest, and other expenses that you deduct cannot exceed the amount of rental income you received.

T

turbo1903Author

Thanks for responding. When you said, "If your expenses (mortgage interest plus property taxes) were more than the rent you received, you are not required to report the income." --is that the full amount for mortgage interest + property taxes or is that of the rental portion of them (mortgage interest and property taxes)? I say that because I live in the property and rent a room. I usually claim a % as rental expense.