I have a rental property which I'm renting to a friend below the fair market rental price. The apartment is outside the US. My total income from this "not-for-profit rental" was lower than my expenses (maintenance fees, insurance and taxes).
First I didn't know the apartment is treated as "not for profit rental" and therefore "personal" (not rental). So I started section "Rentals, Royalties, and Farm" in TT. I picked "Rental Properties and Royalties (Sch E)" and continue with the interview. When asked how many days I was renting this apartment at below the market price, I answered "365" and TT suggested it will delete this rental, because it's personal and not rental. Fine by me.
The problem I have is, I wasn't navigated, nor instructed what to do next. How do I navigate in TT to report my "not for profit rental income"? Bear in mind I want to do Standard Deduction (if that matters).
Yes. It is considered a Not-For-Profit Rental. Since you do not carry on your business or investment activity to make a profit, you cannot use a loss from the activity to offset other income. You do not therefore, need to depreciate.
Not Rented for Profit
Where to report. Report your not-for-profit rental income on Form 1040 or 1040NR, line 21. If you are filing Form 1040 and you itemize your deductions, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), and real estate taxes on the appropriate lines of Schedule A (Form 1040). You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year.
To report:
Yes. It is considered a Not-For-Profit Rental. Since you do not carry on your business or investment activity to make a profit, you cannot use a loss from the activity to offset other income. You do not therefore, need to depreciate.
Not Rented for Profit
Where to report. Report your not-for-profit rental income on Form 1040 or 1040NR, line 21. If you are filing Form 1040 and you itemize your deductions, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), and real estate taxes on the appropriate lines of Schedule A (Form 1040). You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year.
To report:
I can see three options that technically could fit:
1. Other income not already reported on a Form W-2 or Form 1099;
2. Income from renting out personal property (not rental real estate or farm rentals);
3. Other reportable income
Which of these should I pick?
Where would we go to enter the deductions for the not-for-profit rental?
I would like to know about deductions, too. I had a $16,000 sewer repair that I sure would like to write off on my not-for-profit rental income.
A not for profit rental property is treated and taxed like personal property. You can't deduct repair expenses on personal property. You can add the costs of major home improvements to the property's basis whenever you sell or otherwise dispose of the property (this will lower the capital gains when you sell). But for 2023, you would not report a repair expense for personal property on your tax return. @jackpreed