In-law apartment rented as not for profit

[mcd1231]

My client bought a house in 2021 and "rents" her in-law apartment to her daughter for a very affordable price.  The daughter applied for rental assistance and it was issued.  So my client received a 1099 Misc for the rent.  I entered the 1099 Misc on Sch 1 line 8.  How or where do I enter the expenses to offset this rental income?  Thank you

[sjrcpa]

You don't.

[Camp1040]

You enter the 1099-Misc on schedule E not other income on schedule 1.. If taxpayer "rents" to a family member at below fair rental value then you file on schedule E and can only claim deductions up to income.

Well I like @sjrcpa  answer better, claim the income on schedule 1 and interest and property taxes on schedule A, no other deductions allowed, just like a second residence.

[mcd1231]

Sorry but I don't what?  Enter on Sch 1 or don't claim the expenses?

[mcd1231]

Maybe I should not have said rented.  The daughter gives my client $$ toward household expenses.

[Camp1040]

You claim the income and you do not deduct any expenses other than what is allowable on schedule A, mortgage interest and property taxes.

[IRonMaN]

"Very affordable price" and still needs rental assistance? 😶

[sjrcpa]

And the city/county/state pays your client rent.

[IRonMaN]

That's the part that got me.  Must have tried for PPP loans and didn't qualify ☹️

[mcd1231]

She doesn't work.  Not sure why

[sjrcpa]

I think it goes on Schedule 1 Line 8i.