Can I claim rental income on a property that a relative owns (and I am not on the title)?

[kldykstra]

I'm living with my mother and paying for her expenses, including the mortgage. We collected ~$5k of rent last year from a housemate. If my mother files her taxes including this rental income, her income will exceed $4,150 and she will not qualify as my dependent.

Can I claim that income on my tax return in order to claim her as my dependent and file as head of household, even though my mother owns the property and the lease to our housemate is under her name?

[Coleen3 · Accepted solution]

No, you can't claim her income on your return. However, you need to determine was it actual rent you were collecting or more of cost-sharing situation.

You may have questions about whether or not you should claim rental income received from relatives or friends that live with you, and whether or not you can also claim rental expenses. This depends on the type of rental agreement you have with the tenant. Think of cost sharing as charging your relative/tenant a small amount per month to help with groceries, utilities, or general household upkeep. The amount charged would be far less than market value for the rental on the open market. In cases like this, you would not report the income from the cost sharing, but you also would not be allowed to claim any rental expenses.

If you charge a tenant fair market value for the rental, and expect to make some form of profit, you should report all rental income received, and you claim rental expenses consistent with the nature of the rental arrangement.