A not-for-profit rental to a family member isn't treated as a regular rental. By charging a below market rent for the house you are able to disregard the rental income and treat the house as personal use which means just deducting mortgage interest and taxes on schedule A and disregarding the rest.
However, if the family member uses the rental home as their primary residence then you can file a schedule E showing the rental income and then you are allowed deductions up to the amount of rental income. You are not allowed to show a loss.
Here are the IRS rules on this.
Using any of the three options will solve the problem on the Pennsylvania return.
@foxtax
[Edited 01/29/2024]
@foxtax
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
