Moving to rental property and collecting rent from tenant

[bentley]

I live in Massachusetts.  My rental property has been occupied by the same tenant for many years.  I moved to my rental property and have been living in it as my primary residence since Summer 2024 with my tenant as my roommate.  Before I moved into my property, he was paying me $1280/mo.  Now he's paying me $365/mo, which I think is less than fair market value.  He's always been paying for electricity, gas, and internet.  I've been paying all other expenses.  In TurboTax, "Business Income and Expenses", in the rental section, should I say, "I converted this property from rental to personal use in 2024"?  How do I answer the questions in, "Was this property rented for all of 2024"?  Should I report rent received from roommate?  If so, in which section of TurboTax?

[PatriciaV]

Yes, if you personally occupy a property that was formerly a rental, you would report that you converted it to personal use as of the date you moved in. Enter the number of days it was rented before you moved in. If you didn't use the property for personal use before you moved in, report zero personal use days.

Because the rent you're receiving is below fair market rent, you aren't renting for profit. You still need to report the income, and payments of this type are generally reported as "Other Income" under Less Common Income. Payments received for living expenses are not reportable.

You can claim mortgage interest and property taxes for the portion of the year the property was your personal residence under Deductions & Credits >> Your Home (the balance of those amounts would still be rental expenses).