Is the 1/3 owner who lives in my two-family rental property considered a tenant?

Forum|Forum|2 years ago
April 6, 2024
1 reply
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I own 2/3 of a two-family house.
My family member owns 1/3 and lives in one of the units. She pays me a monthly amount of money that is far below market rental rates. I pay for all expenses for the house, including mortgage, taxes, insurance, maintenance, and repairs.
Should I include her contributions as rent payments? Also, can I claim 100% of the available deductions despite her 1/3 ownership?

fanfare

Employee

The two of you need to come to an agreement on allocation of costs and deductions based on the 2/3 - 1/3 arrangement.

@andyboyle

andyboyleAuthor

We do have an agreement on the allocation of costs and deductions. I'm trying to figure out if her contributions should be treated as rent payments or not.

PatriciaV

Employee

If the 1/3 owner is on the title to the property, their payments to you would not be "rent." Instead, these payments offset the expenses that you pay.

This activity would not be considered a rental. You may report the mortgage interest and property taxes under Your Home in TurboTax. But the other expenses are not deductible.

However, if the other party is NOT on the title to the property, this activity would be considered renting part of your home. But since the rental payments are below fair market for your area, you would still be limited to reporting only mortgage interest and property taxes (100%). And the rental payments would be reported as Other Miscellaneous Income.

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