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bethraetz
New Member

I "rented" our second home to my sister for ten months, but below fair market value, and collected $4080 from her as "rent". Since "personal use" where to list "income?"

 
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DS30
New Member

I "rented" our second home to my sister for ten months, but below fair market value, and collected $4080 from her as "rent". Since "personal use" where to list "income?"

Regarding your rental income -

Unless you consider this monthly payment amount as a gift from your sister (the annual gift exclusion amount allows anyone to gift another person up to $14,000 in a single year tax-free), you will need to recognize this income as other income on your tax return (even though you will not be able to claim any rental expenses against this income.)

If your rental income is less than the FMV of rent that should be charged for the property (based on various factors including location and house size) or if you are collecting rent on personal use property (like your car), you will need to recognize this income as other income on your tax return (even though you will not be able to claim any rental expenses against this income.) This type of rental income will be reported on line 21 of your 1040.

To enter this as other income under other miscellaneous income in TurboTax Online and Desktop  (for TurboTax Online sign-in, click Here:(

  1. Click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
  2. Next click on “Wages and Income”
  3. Next click on "jump to full list" or “I’ll choose what I work on” (or see more income)
  4. Scroll down the screen until to come to the section “Less Common Income”
  5. Choose "show more", then Miscellaneous Income
  6. Choose "Other Reportable Income" and enter this information here under other taxable income (screenshot)

Regarding your rental expenses -

Since you are renting for less than the FMV, you will not be able to claim any rental expenses under the rental section. However, you will be able to claim any mortgage interest, mortgage insurance and property taxes on this rental property as though it were a second home.

To enter your Mortgage Interest and insurance  in TurboTax Online (for TurboTax Online sign-in, click Here , then select "Take Me to My Return") or Desktop, please follow these steps:

  1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
  2. Next click on “Deductions and credits”
  3. Next click on "jump to full list" or “I’ll choose what I work on”
  4. Scroll down the screen until to come to the section “Your Home”
  5. Choose "show more", then Mortgage Interest, Refinancing and Insurance and follow the onscreen instructions. 
  6. Select "add a lender" and input your information here 

To enter your Property Taxes in TurboTax Online or Desktop, please follow these steps:

  1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
  2. Next click on “Deductions and credits”
  3. Next click on "jump to full list" or “I’ll choose what I work on”
  4. Scroll down the screen until to come to the section “Your Home”
  5. Choose "show more", then Property Taxes and follow the onscreen instructions
  6. Enter the property taxes under "Other Properties"


View solution in original post

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1 Reply
DS30
New Member

I "rented" our second home to my sister for ten months, but below fair market value, and collected $4080 from her as "rent". Since "personal use" where to list "income?"

Regarding your rental income -

Unless you consider this monthly payment amount as a gift from your sister (the annual gift exclusion amount allows anyone to gift another person up to $14,000 in a single year tax-free), you will need to recognize this income as other income on your tax return (even though you will not be able to claim any rental expenses against this income.)

If your rental income is less than the FMV of rent that should be charged for the property (based on various factors including location and house size) or if you are collecting rent on personal use property (like your car), you will need to recognize this income as other income on your tax return (even though you will not be able to claim any rental expenses against this income.) This type of rental income will be reported on line 21 of your 1040.

To enter this as other income under other miscellaneous income in TurboTax Online and Desktop  (for TurboTax Online sign-in, click Here:(

  1. Click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
  2. Next click on “Wages and Income”
  3. Next click on "jump to full list" or “I’ll choose what I work on” (or see more income)
  4. Scroll down the screen until to come to the section “Less Common Income”
  5. Choose "show more", then Miscellaneous Income
  6. Choose "Other Reportable Income" and enter this information here under other taxable income (screenshot)

Regarding your rental expenses -

Since you are renting for less than the FMV, you will not be able to claim any rental expenses under the rental section. However, you will be able to claim any mortgage interest, mortgage insurance and property taxes on this rental property as though it were a second home.

To enter your Mortgage Interest and insurance  in TurboTax Online (for TurboTax Online sign-in, click Here , then select "Take Me to My Return") or Desktop, please follow these steps:

  1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
  2. Next click on “Deductions and credits”
  3. Next click on "jump to full list" or “I’ll choose what I work on”
  4. Scroll down the screen until to come to the section “Your Home”
  5. Choose "show more", then Mortgage Interest, Refinancing and Insurance and follow the onscreen instructions. 
  6. Select "add a lender" and input your information here 

To enter your Property Taxes in TurboTax Online or Desktop, please follow these steps:

  1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
  2. Next click on “Deductions and credits”
  3. Next click on "jump to full list" or “I’ll choose what I work on”
  4. Scroll down the screen until to come to the section “Your Home”
  5. Choose "show more", then Property Taxes and follow the onscreen instructions
  6. Enter the property taxes under "Other Properties"


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