Renting a home to parents at below market rental

Forum|Forum|3 years ago
September 8, 2022
1 reply
9 views

I have a client who rents a home to his mother at below market rental rates There is no attempt to make a profit on this rental. Here are my questions:

1. Is this rental activity reported on Schedule E? Or is the income reported as other income like a not-for profit hobby with expenses reported on Schedule A?

2. I believe he can claim a deduction for mortgage interest and property taxes as a second home. Can he claim any other deductions against the rental income?

Thank you,

ProSeries Professional

This topic has been closed for replies.

Best answer by KMACK

I just found out the client moved into the home (that he is renting to his mother) at the end of 2020, so now it is more like a situation of renting a room to his mother (the client is going through divorce). His mother continued to pay the same rent as before he moved in which is now more like market rate rent to rent a room in a house in his area.

So, now it can maybe be treated like a normal rental and reported on Schedule E with the usual expenses, taking into account the percentage of the home that is being rented?

Just-Lisa-Now-

Intuit Community Champion

Line 21, then mort int and prop tax on Sch A.

How much are the parents paying? Could it be considered a gift?

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

K

KMACKAuthorAnswer

Level 4

I just found out the client moved into the home (that he is renting to his mother) at the end of 2020, so now it is more like a situation of renting a room to his mother (the client is going through divorce). His mother continued to pay the same rent as before he moved in which is now more like market rate rent to rent a room in a house in his area.

So, now it can maybe be treated like a normal rental and reported on Schedule E with the usual expenses, taking into account the percentage of the home that is being rented?

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