Question

We own a 2nd property that my mother lives in. Should we treat this as a rental or a 2nd property?

Forum|Forum|7 years ago
June 6, 2019
1 reply
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My mother sometimes helps to pay the mortgage. Which would be more beneficial - rental property or 2nd home?

TurboTax Self Employed Online

Employee

It is unlikely that you could legally classify it as a rental, unless your mother were paying fair market value on the rent. The IRS considers it a personal use dwelling under the following conditions (IRS Tax Topic 414):

A day of personal use of a dwelling unit is any day that it is used by:

You or any other person who has an interest in it, unless you rent your interest to another owner as his or her main home under a shared equity financing agreement
A member of your family or of a family of any other person who has an interest in it, unless the family member uses it as his or her main home and pays a fair rental price
Anyone under an agreement that lets you use some other dwelling unit
Anyone at less than fair rental price

When you treat it properly as a second home, you can deduct mortgage interest and property taxes on Schedule A, just like you can for your primary residence.

D

Dejecm29

Do you have to claim the amount the family member contributes toward 2nd property bills?

J

JamesG1

I think you are saying that you have a second home and a family member is contributing to the house payment, mortgage interest and real estate taxes. I assume that only you are an owner of the real property and the other family member is not?

If this is the case, you would be able to deduct that portion that you paid on form 1040 Schedule A. That portion the other party paid would not be reported since that party is not an owner of the real property.

See this TurboTax help. See the last option.

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