Rental below Fair Market Value but still makes a little profit is this still a not for profit rental?

Forum|Forum|1 year ago
October 30, 2024
2 replies
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My rental is rented out far below FMV to a relative. The mortgage is paid off so I still make a little profit for the rental about $500. Is this still considered a not for profit rental even though I am making a profit?

Anonymous_

Employee

s102906

Thank You 😀

Anonymous_

Employee

No text available

Mike9241

you have another issue. (Jackson, TC Memo 1999-226). there the taxpayer rented below fair rental value to his parents. The court concluded that the parents' use was personal use by the taxpayer because the rent charged was below fair value. The property was 100% personal-use so no rental expenses (schedule E) were allowed. The taxpayer was still required to include the rent in income. any interest and taxes you pay would go on schedule A and be subject to current tax law limitations.

s102906

Thank You for the response. Much appreciated.

So I should be claiming not for profit rental (personal use). Report income as other. Claim property tax and mortgage interest like it was a second home, in my case none since mortgage is paid off. Do not claim expenses up to rental income. And do not claim depreciation. Does this sound about right?