Adult child paying mortgage in 2nd home - rental income?

[LP76]

Hi - I am new to this situation and don't want to mess this up tax wise and so just joined the Community and am asking for help with this situation.

Question:  If my grown child makes payment for mortgage and utilities, is that considered rent?

Background:  My wife and I purchased a house 3 years ago in another state with the intension to make it our retirement home. Rather than leave it vacant a young adult child moved into the house.  Due to aging parents our retirement was delayed until earlier this year. We have now purchased a different retirement house and the adult child has begun making the mortgage payments (has been paying the utilities).  We lose a little money monthly on the deal, plus have been paying maintenance costs.  Question:  Is this considered rental income?

[PatriciaV]

No, this is not considered a rental activity because you are not receiving fair market rent for the house. Instead, this is considered a "second home." Any income you were paid is reported as miscellaneous other income, which is fully taxable. Property taxes and mortgage interest are deductible, but no other property expenses can be deducted.

Additional Information:

• IRS Pub 527 Not Rented for Profit
• Lookup Fair Market Rent

[LP76]

Thank you Patricia for your response.  Greatly appreciated.