Parent renting half of duplex for free, does it make income a wash for rental property?

[VermonTax]

Apt A:
Renter is paying $600 a month for a 2bed/1bath and is well below fair market value

Apt. B:
My mother lives here as her primary/only home rent-free

So on my income taxes when I go to declare income is it $0?

Thanks for any info. on this!

[ThomasM125]

I think you mean you own a duplex and rent one unit for $600 and your mother stays in the other unit for free. If so, you would report the rent received as Other Income on your tax return, since the rent is below market value.

You would report the rental income in the Less Common Income section, then Miscellaneous Income, 1099-A, 1099-C, then Other Reportable Income. You can deduct the mortgage interest and property taxes if this is a first or second home you own, and you would enter them in the same place your enter them for your primary home, in the Your Home section in  the Deductions and Credits section. Any other rental expenses would only be deductible as miscellaneous itemized deductions, but only up to the amount of the rental income less mortgage interest and property taxes.

[VermonTax]

My only other question is this is a 2nd home for me, but I don't live there any days of the year.  I don't own any 3rd or more properties, just this duplex in the question and my primary home. 

Even though the duplex generated the $600 a month income, and I don't live there I can claim the interest/property taxes with my own primary home then?

Also, thank you for the explanation of the info. and really appreciated how you broke it all down.  🙂

[JillS56]

Please clarify.  Are you renting to a family member?   The reporting of rental income in your case is dependent on whether or not you are renting below fair market value to a family member.

[Carl]

Basically, with the tax changes of 2018, if you are renting below FMV (and it appears you're renting way below that) then the property is still considered personal use. Nothing gets reported on SCH E and the income is reported as "other income" and that's it.

The only deductions you can claim on the property are for mortgage interest and property taxes. Both are a SCH A itemized deduction subject to the SALT limits for itemized deductions.