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Rental income below fair market value

Forum|Forum|6 years ago
June 6, 2019
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Where do I report rental income if it is below fair market value?

TurboTax Premier Online

Best answer by NicoleU

You may claim it as income. Per the IRS, "If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year."

Per the IRS, you would report your not-for-profit rental income on Form 1040, line 21, Other Income.

If you are filing Form 1040 and you itemize your deductions, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses.

Claim your other rental expenses, as miscellaneous itemized deductions on Schedule A (Form 1040), line 23.

For more information, please see this IRS link: https://www.irs.gov/publications/p527/ch04.html#en_US_2016_publink1000219164

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NicoleUAnswer

Employee

You may claim it as income. Per the IRS, "If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year."

Per the IRS, you would report your not-for-profit rental income on Form 1040, line 21, Other Income.

If you are filing Form 1040 and you itemize your deductions, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses.

Claim your other rental expenses, as miscellaneous itemized deductions on Schedule A (Form 1040), line 23.

For more information, please see this IRS link: https://www.irs.gov/publications/p527/ch04.html#en_US_2016_publink1000219164

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gr2ry

answered as if were using a hard paper form 1040. Turbotax doesn't work this way. Please answer as if using the software.

Carl11_2

Employee

Report the rental income/expenses in the rental section, as you normally would. Some screens will ask you if you are renting at below FMV, and ask you if you are renting to family. If you indicate you are renting at below FMV then the program will take care of things for you.

You still enter all your expenses, even if they exceed the rental income. The program will take care of any splits required. (if any are required) between SCH E and SCH A.

Also note that the program will take care of disallowing any carry overs if you are in fact, renting at below FMV. One possible issue with this, is that if you were renting at FMV in the past which allowed carry overs, then the first year you rent below FMV, you lose all those past year carry overs permanently and forever.

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tax-puzzler

When you talk about carry overs, do you mean rental expenses that are being depreciated? Would that include depreciation on the rental home itself?

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tax-puzzler

We have a property that we rented at FMV for several years, currently we are renting to family members at below FMV. Since we have property management we get a 1099-misc. I have been trying to figure out where to list this. It is box 3 rents, so when I list it as a 1099-misc it asks me about FMV and then shows up in the rental section of the program...but I'm told not to list expenses on below FMV property there. I'm taking standard deduction and apparently we cannot list expenses on Schd A anymore in any case.

Is the answer to list the entire amount in other reportable income as some have suggested or is it true that I can list the expenses on Sched E and that the program will adjust them to be no more than the income? I have used depreciation on the property and some things such as appliances in the past, I don't need to use those as an expense this year but do not want to lose the ability to depreciate when I return to FMV in the future. Any helpful knowledge about this puzzle piece in my return is appreciated.

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Turrell8024

I have two rental's one I rent to my daughter below fair market value, the other to my friend's son.

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Cynthiad66

You may claim it as income. Per the IRS, "If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year."

Per the IRS, you would report your not-for-profit rental income on Form 1040, line 21, Other Income.

If you are filing Form 1040 and you itemize your deductions, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses.

Claim your other rental expenses, as miscellaneous itemized deductions on Schedule A (Form 1040), line 23.

For more information, please see this IRS link: https://www.irs.gov/publications/p527/ch04.html#en_US_2016_publink1000219164

Per @

joanfukai

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