I'm renting my apartment to a friend (apartment is abroad). He pays me nothing, but he must pay all the bills, maintenance fees, garage fees (around $100/mo). I treat this as my income, because I would have to pay it, no matter if someone lives there or not. The catch is, that minimum rent in this area is about $400, the average $500. So it’s rented below fair market value, for sure. My question is, how do I tax it?
Can I file Schedule E, with “3. Rents received.” - $1200 and “20. Total expenses.” - “$1200”? This would mean I would not pay any taxes on it, deduct all my expenses from my income.
Or… should I report $1200 as “Other income”, without deducting anything. I would pay taxes on the whole $1200. Is this the way to go? I’m doing standard deduction on my return.
I guess my biggest confusion is, can I even treat it as a real rental apartment (for Schedule E) if it’s rented under the fair market value?
It’s not a temporary deal, he lives there for a while now.
Again, I’m doing standard deduction on my return.
Thank you for help
