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Level 2
posted Feb 24, 2021 4:59:37 PM

I sublet my home that I rent for less money than what it costs to me for a short term. Do I need to file it as an income? If yes, how?

Turbotax does not allow me to say I do not own the house. Do I need to say I own it?

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1 Best answer
Level 10
Feb 24, 2021 5:53:08 PM

You will report the rental income that you receive and then the expenses.  The income is reported as passive activity on Schedule E.  Since you do not own the home, you will not add the home in the asset and depreciation section.

 

Federal 

Wages and Income

Rental Properties and Royalties

Go through the screen

List the amount that you pay for your rent as a Miscellaneous Expense

 

You mention that you are renting for below your costs.  If you are renting for below fair market value, this can be considered rental not for profit.  IRS Pub. 527 Residential Rental Property.

Report your not-for-profit rental income on Schedule 1 (Form 1040), line 8. If you itemize your deductions, include your mortgage interest and mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses from your not-for-profit rental activity when figuring the amount you can deduct on Schedule A.

@erkanalacan 

 

[edited 3/3/2021 | 1:10 pm PST]

4 Replies
Level 10
Feb 24, 2021 5:53:08 PM

You will report the rental income that you receive and then the expenses.  The income is reported as passive activity on Schedule E.  Since you do not own the home, you will not add the home in the asset and depreciation section.

 

Federal 

Wages and Income

Rental Properties and Royalties

Go through the screen

List the amount that you pay for your rent as a Miscellaneous Expense

 

You mention that you are renting for below your costs.  If you are renting for below fair market value, this can be considered rental not for profit.  IRS Pub. 527 Residential Rental Property.

Report your not-for-profit rental income on Schedule 1 (Form 1040), line 8. If you itemize your deductions, include your mortgage interest and mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses from your not-for-profit rental activity when figuring the amount you can deduct on Schedule A.

@erkanalacan 

 

[edited 3/3/2021 | 1:10 pm PST]

Level 2
Feb 25, 2021 6:49:02 AM

@MaryM428  this is very helpful. Thank you.

 

The confusing part is the ownership. TurboTax does not allow you to say "I rent this place," so you have to claim you own the place to move forward. Is that ok? I claimed I own 1% of the place to make it as close as 0.

 

 

 

Returning Member
Feb 26, 2021 4:35:23 PM

My refund status was not found on where’s my refund on the IRS And my refund state it is accepted by the IRS on TurboTax,And why my refund status not found on where is my refund 

Expert Alumni
Mar 3, 2021 10:12:05 AM

@erkanalacan

 

It is okay to not answer whether you own or rent. If the 1% does not interfere with calculations, there is no reason to go back and change it. The main idea is that you do not take depreciation on an asset you don't own.