Hi - My mom currently lives in a house owned by her two brothers, where she pays them $1,100/month rent. This amount is close to FMV for a room rental in the area -- she's the only one who lives in the house, but the other rooms are reserved for when family visits. Her brothers pay water and utilities. I am purchasing half of the interest in the house (by buying out one of her brothers who wants to sell). It will be an all-cash buyout at fair market value. My share of property taxes will be about $7k/year. This will be the only property I own, and I do not intend live there. Is it better to have her continue to pay $1,100 rent so I can claim this as a rental property (where we pay for utilities and water) or can I let her live there rent-free on my end (she would still pay her brother $550/mo.)? Any input would be greatly appreciated. This is all new to me. Thank you.
