There is no clear cut definition of "Fair Market Rental Value." The best I can come up with is this:
What the consumer is willing to pay
What others charge for a "SIMILAR" property in your area has only a little to do with it. If there's an identical 3br/2ba house next to yours that gets $1000/mo, but you're only charging and collecting $600/mo, the question is why?
If the property next door has been modernized with new appliances, more energy efficient windows and a new roof, and yours has not, then that could be why. So in this situation, are you charging FMRV? Most likely yes.
It's all very subjective. The FMRV question mainly comes into play based on two criteria, with the main one being, "are you renting to a family member?" (there are other criteria, but I'm not addressing that here.)
The other question is, are you renting with the intent to make a profit?
