Purchased a 2nd home as a rental property. We had substantial repairs and renovations completed after purchase. Currently we pay the bills, no income. How do we report?

[kbressl1955]

Our daughter and grandchildren live in the home. In future they will be paying rent to cover mortgage and utilities.

[xmasbaby0]

So right now you simply own a second home and are allowing family members to live in the home without paying rent.   You can enter the mortgage interest and property taxes paid in 2025, and possibly loan origination points.  You cannot enter "expenses" for a second home for which you are not collecting any rent.   If the situation changes and your family members start paying rent, you can re-visit the issue of calling the home a rental property and entering rental income and expenses.

[Vanessa A]

This is not considered a rental property at this point, it is simply considered a second home.  In the future if they are paying rent that covers the mortgage and utilities, it still will not be considered a rental property, instead it will be considered personal use.  As a personal use property,  if you itemize, you may be able to claim the mortgage interest and property taxes on Schedule A. However, you would not list this as an asset or depreciate the property.  You also would not be able to deduct repairs, maintenance or utilities. 

In order for this to be considered a rental property, you would need to rent it to your daughter as you would a stranger at the Fair Market Rental Value in your area.  If you do not treat your daughter like you would a stranger for the rental, you cannot claim it as a rental.  Even a small family discount is not allowed.