Below FMV aren’t to a relative

[Map1945]

I have rented a second home to relative for the full year 2025. It was about 35% below market in my area. My only expense this year was property taxes. How do I report this income.

[ThomasM125]

You report the income as "Other" income as follows:

1. From the Federal menu in TurboTax find Wages and Income 

2. Find Less Common Income

3. Choose Miscellaneous Income, 1099-A, 1099-C

4. Choose Other Reportable Income

5. Enter a description of the income and the amount

You can enter the property taxes as itemized deductions in the Deductions and Credits section and then Your Home and then Property Taxes if the property is your chosen second home. That will only help you if you benefit from itemizing your deductions. 

[Map1945]

Are any of the expenses for home insurance and maintenance items deductible?

[Vanessa A]

No.  These are considered personal expenses and are not deductible.  Since you are renting to a relative at below FMV, your other expenses like insurance and maintenance are treated just like they are for the house you live in.  You can deduct the Property taxes and mortgage interest on Schedule A as personal expenses if you itemize you return.  Otherwise, the expenses are not deductible.  If you make any improvements to the home you can add the cost of the improvements to your cost basis for if you sell the house.  This will help to lower your profit on the sale of the home. 

Itemized expenses include things like mortgage interest, charitable contributions, state and local taxes up to $40,000, and medical expenses in excess of 7.5% of your AGI.

Then your total itemized expenses would need to be greater than your standard deduction below in order to benefit from your expenses. 

The 2025 Standard Deductions are as follows:

• Married Filing Joint (MFJ)              $31,500
• Married Filing Separate (MFS)      $15,750
• Head of Household (HOH)             $23,625 
• Single                                                 $15,750                                

Blind or over 65 and MFJ or MFS add $1,600

Single or HOH if blind or over 65 add $2.000

Standard Deduction vs. Itemized Deductions: Which Is Better?

[Map1945]

Two other questions. Because I am renting below market and it is to a relative is it considered not for profit. So I report this income on line 8l but cannot deduct anything on line 24c on schedule 1

[Vanessa A]

Correct.  I am assuming you are referring to with Schedule 1 line 24b not 24c?  Since you are renting to a relative below FMV, it is considered personal use, not for profit. That means, this is treated just like it is your home.  You cannot include expenses in a way that will reduce the income.  This is similar to hobby income.  You must report the income, but you cannot claim the expenses associated with the income.

If you want to be able to deduct expenses next year, you would need to raise the rent to FMV and treat them as you would a stranger.  Then you would be able to deduct the expenses associated with the income as it would all be reported on Schedule E. 
 

[Mike9241]

there is a court case Bindseil TC Memo 1983-411) where becuase the property was rented to the taxpayer's parents who were expected to take "unusually" good care of the property and certain other expenses were avoided, fair rental in this case was found to be 80% of market. However, in Jackson TC Memo 1999-226, also rented by the taxpayers to their parents, below market rent could not be justified, so the income was taxable, but expenses, except for those that would be on Schedule A weren't deductible.  

[Map1945]

So what is line 24b used for?

[ThomasM125]

Line 24(b) on Schedule 1 is used to deduct expenses associated with the rental of personal property engaged in for profit but not related to the business of renting property. It does not apply to real estate though.