I have a rental house where the tenants were not able to pay rent in 2016 and I am allowing them to stay. In addition I built a garage and paved a previously unpaved driveway. Considering the depreciation aspect is it better to show the property as rent

[doug4417]

For several years prior to 2016 the tenants had been able to pay some rent although not the full fair rental rate and I reported that appropriately.  The tenants are still living there and will continue to do so for the foreseeable future whether or not they can pay rent for this year, 2017

[PatriciaV · Accepted solution]

Unfortunately, when you rent below fair market price, the property is considered a "second home". You may not report this as a Rental Property. Any improvements you made would increase your basis in the property when/if you should sell it in the future, but are not deductible or depreciated.

See instructions on how to report income (if any) and expenses below:

https://ttlc.intuit.com/replies/5898460