He may be hurting himself as far as the tax return is concerned, in that he is paying tax on rent income that could be reduced by all associated expenses if he was charging a fair rent. I assume you mean by charging less than the mortgage payment that he is charging less than fair rent. If he charged fair rent, then he could deduct the mortgage interest, property taxes and other cost of maintaining the home directly against the rental income. Otherwise, only the mortgage interest and property taxes would be deductible as itemized deductions, which may have limitations.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
