Rental property Question

Forum|Forum|2 years ago
March 6, 2024
1 reply
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A friend ceased using her former home as a rental property (she converted it from personal use years ago). She collected 2 months rent in 2023 and is now allowing a family member to live there rent free.

I have been trying to figure out the tax consequences (if any) for her 2023 taxes. I only see information regarding converting it to personal use, not for her particular situation.

How would this be handled tax wise?

AnnetteB6

The property will be treated as a rental property for the months is was rented or advertised and available to rent. Expenses during that time can be claimed on Schedule E as well as the rental income.

When the family member moved into the house without paying rent, the property was essential converted from a rental property to personal use. Unless a fair market value rent is being charged, no expenses may be claimed. If a lower than fair market value rent were being charged, then it would be considered a not-for-profit rental and only expenses up to the amount of rental income could be claimed. In either case, it is no longer reported on Schedule E as a rental property.

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