If the "FMV" is more then what the what you received

[bren2bhappy]

The rental property we have is not in very good shape and so we can not get what is deemed the FMV for it i.e. FMV for the are is $1,600 but we only get $850 What happens  since we charge less then FMV?

[MichaelL1]

Due to the condition of the rental and all you can get is $850, then you answer that you are renting at FMV.

Now if it is a friend or relative and that is the reason you are only getting $850 then you answer "yes" you are renting at less than FMV. 

Renting at less than FMV will reduce the deductions that can be taken.