Rental income below fair market value

[Carl]

Report the rental income/expenses in the rental section, as you normally would. Some screens will ask you if you are renting at below FMV, and ask you if you are renting to family. If you indicate you are renting at below FMV then the program will take care of things for you.

You still enter all your expenses, even if they exceed the rental income. The program will take care of any splits required. (if any are required) between SCH E and SCH A.

Also note that the program will take care of disallowing any carry overs if you are in fact, renting at below FMV. One possible issue with this, is that if you were renting at FMV in the past which allowed carry overs, then the first year you rent below FMV, you lose all those past year carry overs permanently and forever.

[Tiffany8590]

How can i do rent rebate

[DianeW777]

If the rent rebate is available in TurboTax, it will be included in the state interview section. If it is the Pennsylvania Rent Rebate you can review the information and submit it by mail.

TurboTax does not support Form PA-1000, property tax or rent rebate claim. You can complete and mail in the form using the link below.

• Pennsylvania Property Tax and Rent Rebate

Please update here it you are referring to another state.

[savfre]

Where and how do you enter rental property expenses in Turbotax for below market rental property if you take a standard deduction?

[PattiF]

Here is information from the IRS Publication 527 about renting below market price. Expenses are to be entered on Schedule A. There is no provision for not reporting the expenses another way.

[Turrell8024]

I have two rental's one I rent to my daughter below fair market value, the other to my friend's son.

[Cynthiad66]

You may claim it as income. Per the IRS, "If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year."

Per the IRS, you would report your not-for-profit rental income on Form 1040, line 21, Other Income.

If you are filing Form 1040 and you itemize your deductions, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses.

Claim your other rental expenses, as miscellaneous itemized deductions on Schedule A (Form 1040), line 23.

For more information, please see this IRS link: https://www.irs.gov/publications/p527/ch04.html#en_US_2016_publink1000219164

Per @

joanfukai

[tax-puzzler]

When you talk about carry overs, do you mean rental expenses that are being depreciated? Would that include depreciation on the rental home itself?

[tax-puzzler]

We have a property that we rented at FMV for several years, currently we are renting to family members at below FMV. Since we have property management we get a 1099-misc. I have been trying to figure out where to list this. It is box 3 rents, so when I list it as a 1099-misc it asks me about FMV and then shows up in the rental section of the program...but I'm told not to list expenses on below FMV property there. I'm taking standard deduction and apparently we cannot list expenses on Schd A anymore in any case. 

Is the answer to list the entire amount in other reportable income as some have suggested or is it true that I can list the expenses on Sched E and that the program will adjust them to be no more than the income? I have used depreciation on the property and some things such as appliances in the past, I don't need to use those as an expense this year but do not want to lose the ability to depreciate when I return to FMV in the future. Any helpful knowledge about this puzzle piece in my return is appreciated.

[PatriciaV]

It depends. You may want to test this in TurboTax, which allows you to compare results from different strategies before you finalize your return. (This is easier in the CD/Download version, but can be done using TurboTax Online.)

First, enter Form 1099-MISC under your existing Rental Property, answer the FMV questions accurately, and report expenses as usual. Then review your tax summary to see if your entries were handled as you expected.

You should have zero net income from the Rental Property (per the IRS limitations on renting below FMW), but see some portion of your mortgage interest and property taxes reported as Itemized Deductions. (These items won't have much affect if you don't itemize.)

If this isn't the result you expected, try entering the 1099-MISC under Less Common Income and the interest & taxes under Your Home (as a second home), but don't enter more than the amount of rent you were paid. Then review your tax summary again.

Choose the strategy that gives you the best outcome for your tax situation.

Additional info:

• How do I preview my 1040?
• IRS Pub 527 Not Rented for Profit

[asifhi]

IRS interview form to determine the answer:

https://www.irs.gov/help/ita/is-my-residential-rental-income-taxable-and-or-are-my-expenses-deductib...

[leeloo]

It is considered a Not-For-Profit Rental.  Since you do not carry on your business or investment activity to make a profit, you cannot use a loss from the activity to offset other income. You do not therefore, need to depreciate.

Not Rented for Profit

Where to report.   Report your not-for-profit rental income on Form 1040 or 1040NR, line 21. If you are filing Form 1040 and you itemize your deductions, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), and  real estate taxes on the appropriate lines of Schedule A (Form 1040). You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year.

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.

More information.   For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Pub. 535.

 https://www.irs.gov/pub/irs-pdf/p535.pdf