Hello,
I am here to inquire about my situation. I have this property which I am renting out to a relative at a below fair market price as their main home. I am having trouble determining whether to report this as a personal use property or reporting it as a not for profit rental property. Additionally, if I were to file for either of these, where would I need to report these. Specific forms and line numbers would be much appreciated. Thanks for the guidance.
Since you are renting real estate instead of personal property (such as a trailer or tools for example), this would be a not-for-profit rental property.
You would report your income as Other Income and deduct your mortgage interest as part of Schedule A if the property qualifies as a second home for you. You can also deduct the property taxes on Schedule A.
To report the income on Form 1040 Schedule 1 line 8, go to Wages and Income > Less Common Income > Miscellaneous Income > Other Reportable Income. This will allow you to enter your own description for the income and the amount. You can also use this method to report any expenses not claimed on Schedule A as long as the total expense claimed does not exceed your income. Enter a negative amount for an expense.
The following information is an excerpt from IRS Publication 527 Residential Rental Property:
Not Rented for Profit
If you don’t rent your property to make a profit, you can’t deduct rental expenses in excess of the amount of your rental income. You can’t deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year.
Where to report.
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.
Presumption of profit.
If your rental income is more than your rental expenses for at least 3 years out of a period of 5 consecutive years, you are presumed to be renting your property to make a profit.
Since you are renting real estate instead of personal property (such as a trailer or tools for example), this would be a not-for-profit rental property.
You would report your income as Other Income and deduct your mortgage interest as part of Schedule A if the property qualifies as a second home for you. You can also deduct the property taxes on Schedule A.
To report the income on Form 1040 Schedule 1 line 8, go to Wages and Income > Less Common Income > Miscellaneous Income > Other Reportable Income. This will allow you to enter your own description for the income and the amount. You can also use this method to report any expenses not claimed on Schedule A as long as the total expense claimed does not exceed your income. Enter a negative amount for an expense.
The following information is an excerpt from IRS Publication 527 Residential Rental Property:
Not Rented for Profit
If you don’t rent your property to make a profit, you can’t deduct rental expenses in excess of the amount of your rental income. You can’t deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year.
Where to report.
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.
Presumption of profit.
If your rental income is more than your rental expenses for at least 3 years out of a period of 5 consecutive years, you are presumed to be renting your property to make a profit.