No you are not allowed to depreciate your house as you are renting at below market value.
If
you rent your property below fair market value, the IRS considers that you do
not rent your property to make a profit. You are not allowed to use Schedule E to claim rental income and expenses. If you are renting your first or second home you can deduct mortgage interest on Schedule A. You can also deduct property taxes on Schedule A as part of your itemized deductions.
Instead you need to enter your rental income as Miscellaneous Income.
Once you are in your return:
- Click on Federal Taxes at the top of the screen
- Click on Wages & Income
- Scroll all the way down to Less Common Income
- Scroll down to Miscellaneous Income
- Click on Start
- Click on Other reportable income
- Enter description of rental income and enter rental amount.
Please refer to this
IRS document , especially the section on Not
Renting for Profit on page 16 on how to report income and expenses:
https://www.irs.gov/pub/irs-pdf/p527.pdf
