You should claim your rent as "Other income."
...and if you do that, you can not deduct "any" expenses against that income. *Not* *one* *single* *penny*.
According the IRS, "If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income
So that doesn't make it "other income". It's still rental income and it still gets reported on SCH E. But if you are not renting the property at FMRV then you must indicate that when asked about it in the program.... especially if you are renting to family. Then the program will not allow you to deduct any losses that exceed your rental income. You can "claim" all the losses you want. But once your taxable rental income reaches zero (and it will, I guarantee it) no more losses are allowed and you are "NOT" allowed to carry forward losses either. This has the potential to hurt you big time, in the tax year you sell the property.
