@AmeliesUncle wrote:\
Yes, FMV has a range. FMV for an existing tenant that is known to be a 'good' renter (such as your son) can be somewhat lower than FMV to an unknown stranger.
I agree, but the range is not unlimited. For example, I have my doubts as to whether a "good renter discount" would justify a discount in excess of 25%.
On the other hand, I believe the length of the term would be relevant; a longer term would appear to support a larger "discount" from FRV. Here, if the son had an agreement to lease the property for a 5-year term, one could argue for a greater discount.
Regardless, what constitutes a fair rental price, and the various criteria, is set forth in the IRS publication at the link below.
https://www.irs.gov/publications/p527#en_US_2020_publink1000285445
