Declaring Rental Income For Renting House to Family Member

[surfdog]

We are renting our home to our daughter for less than the current mortgage and we do not plan to claim any type of tax deduction for this at all. We retain a room in the house just for us as we visit often. The rent is less than $12,000 a year.

My question is... is there a requirement to claim this as income still?  If the answer is yes, a follow up question is....  what would prevent us from just letting her stay there for free and having her gift us the amount  she pays... since it's less than the $15,000 gift declaration amount?

Again no intention to deduct any expenses, claim depreciation, and if ever sell we expect to pay any capital gains tax if applicable (although at current prices the math negates any at this time).

Thanks ahead.

[Critter]

You do NOT have a rental property to report on your tax return  ... you simply have a second home that family lives in and they help with the bills... nothing to report anywhere. 

[Carl]

Agree with @Critter on this one. If the house was "in fact" rented out before your daughter moved in, all you need to do is convert it to personal use at least one day before she moved in, and you're done. You'll claim all income and expenses up to the date of conversion, and that's it.

From the conversion date on, the only thing you can claim is mortgage interest and property taxes on SCH A subject to the $10K SALT limits.

[surfdog]

Thanks to both for the input. We never rented it before, she just moved in when we left. As it turns out there's not even enough interest or taxes that warrant itemizing on a SCH A. We'll just be taking the standard $24,400 joint deduction which far exceeds anything we could itemize for both houses.