There are actually two completely separate rules involved. But for 2018-2025, the treatment is almost the same.
1) Renting at less than Fair Market Value. This is your situation. No deductions are allowed except mortgage interest, real estate taxes and casualty losses.
- I have NOT deeply researched this so I could be completely wrong, but in my opinion these deductions could hypothetically be on Schedule E, *IF* you also Itemize on Schedule A (if you don't itemize on Schedule A, no deductions would be allowed). The result would be very similar to deducting it on Schedule A (the only difference would be it could reduce SALT limitations and slightly lower AGI).
- For anybody wondering about that statement, in my opinion it would be similar to the "excess" interest and taxes on Form 8829 for a Home Office. But as I said, I have not deeply researched that aspect, so I could be mistaken.
2) Not-For-Profit rental. This technically is a different rule. This hypothetically could be rented at Fair Market Value, but the circumstances are that it isn't a For-Profit activity. The mortgage interest, real estate tax and casualty losses would be on Schedule A. For years before 2018 and after 2025, this situation (if it somehow weirdly was rented at Fair Market Value) could also claim other rental deductions on Schedule A (subject to the 2% limit). For for the years 2018-2025, those deduction are not allowed.
