Lease house by Remainderman

[cherielw]

I am Remainderman on my mother's house, which is now vacant, as she is in assisted living.  I want to lease her house to bring in extra income to help pay her self-pay assisted living rent.  She gets social security and VA Aid & Attendance.  We have been advised that we cannot lease her house and have that money go into her bank account, as it will affect her VA benefit.  Is there any way around this? Her savings will not last long if we can't get every little bit of help possible and rental income would go a long way.  We can't put her house in my name, because it would be considered income for her and again, would end her VA benefit.  Any advise would be greatly appreciated.

[Carl]

I don't see how this is a tax related question. You need to seek the assistance of a local professional on this matter in your jurisdiction. We have "elder attorney" services where I live. Maybe you have that or similar in your locale? 

[cherielw]

We will seek assistance locally.  But it is a tax question, because we need to know if she will need to claim the rental income or if there is a way to handle it so she does not lose her VA benefits.  In any event, we will seek local assistance.

[Vanessa A]

Yes, if she is renting the home out, this is considered taxable income and it will be reported on Schedule E.  If the property is rented at Fair Market Value for the area, then you would be able to claim depreciation and expenses associated with the rental of the property.  The expenses and depreciation will lower the overall reported income and could potentially result in a loss.  

Be aware, if you do NOT rent it at FMV, then this can be considered personal use property and you may not be able to claim any expenses.  In this situation, you would only report the income.  

When it comes to taxes, unless income is specifically exempt, it is considered taxable income.