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ett9300
Level 2
February 22, 2022
Question

Do I have to claim rental income when family member pays rent below fair market rate?

  • February 22, 2022
  • 13 replies
  • 175 views

We just purchase a second home.  My father lives there and pays me a monthly rent which is below fair market rate.   He pays for the utilities.  I pay for home owner insurance and property tax.  Do I have to claim his rent money as a rental income?  If I do, can I also claim home owner insurance and property tax as rental expense?

I am filing for the standard deduction.  Thanks.

    13 replies

    Mike9241
    Level 15
    Mike9241Level 15
    Level 15
    February 22, 2022

    This is an update to my former answer

    in Jackson TC Memo1999-2226. 100% personal use, renting to family at below fair rental value, resulted in all the income being taxable but no expenses were allowed to be deducted against the rental income. 

    Mike9241
      E
      ett9300Author
      Level 2
      February 22, 2022

      Thanks.  Questions:

      1.   Do I add the Property Tax of my second home and my Main home and enter the total amount to

      Schedule A?

      2.  I paid for the new roof last year.  Since I can't claim Rental Expense, I cannot claim the new roof either.  Is it correct?

      3.  Can my father claim Renter's credit since he pays me rent?

      Thank you.

       

       

       

       

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