Rental Residence

[poncho0091]

I own a second home from when my mother passed. My father lives in this home at no rent, but there are still taxes and other expenses in this home. Do I classify it as a rental since it's not my primary residence or can I claim these paid taxes under my personal taxes. Is it considered as personal use all year if I must classify it as a rental? Would personal use negate the tax benefit?

[DS30 · Accepted solution]

Since you father lives in the house rent free, you will not be able to claim this as a rental house (just as a secondary residence). This is due to the fact that the property is not rented at FMV.

However, you will be able to claim any mortgage interest, mortgage insurance and property taxes on this rental property as though it were a second home.

To enter your Mortgage Interest and insurance  in TurboTax Online (for TurboTax Online sign-in, click Here , then select "Take Me to My Return") or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Deductions and credits”
3. Next click on "jump to full list" or “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Your Home”
5. Choose "show more", then Mortgage Interest, Refinancing and Insurance and follow the onscreen instructions. 
6. Select "add a lender" and input your information here 

To enter your Property Taxes in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Deductions and credits”
3. Next click on "jump to full list" or “I’ll choose what I work on”
4. Scroll down the screen until to come to the section “Your Home”
5. Choose "show more", then Property Taxes and follow the onscreen instructions
6. Enter the property taxes under "Other Properties"

[poncho0091]

Thank You. Additionally, for future reference, if there was rent, but it still remained below the FMV, would it be treated the same?

[DS30]

Yes but you would have to recognize the below FMV rental income as other miscellaneous income.

[poncho0091]

Thank you