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hLL_44
Returning Member

Renting to a family member? Rental income or personal use?

I moved into an assisted living facility 3 years ago.  I moved out of what was my primary residence.  My daughter was living with me at the time, and she continued to live there as her primary residence.  She pays me $1200 a month to pay mortgage ($485), utilities (~$100), HOA fees  ($990 every 3 months), taxes ($2978 a year), and Insurance ($1675 a year).  I lose about $1800 a year on this arrangement, but I really am only a pass through for her to pay the bills.  She is paying about 50% of Fair market value rent.  I use the Standard Deduction.

The first 2 years I paid taxes on the "rental income" and deducted the HOA, utilites, and insurance.  As I read about rental income versus personel use, I am wondering if I dont have to report the pass through rental income?  I dont take any deductions for the taxes and mortgage interest because I dont itemize.  

Is that ok?  Could I even go back and adjust my past years tax returns to make the same changes?

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2 Replies
hLL_44
Returning Member

Renting to a family member? Rental income or personal use?

My mortgage interest is 3093.85/year.  

Per the IRS calculations, I think my rental income is about $1400 a year.  Should I just report that?

Vanessa A
Expert Alumni

Renting to a family member? Rental income or personal use?

You need to report the full $14,400 you receive for the year then add expenses to show how you get to the final number.

 

You could go back and amend your returns if you itemize, however, unless you have a large amount of deductible medical expenses, it is very likely since your mortgage interest is less than $3,100 per year that you would not see any change in your return.

 

Do you have income other than the rental income?  Are you on Social Security?  Do you have taxable income?  Do you pay anything in or get everything back?  If you don't pay anything in every year, and have no tax liability when it is all said and done, then there would be no reason to go back and amend your returns as it would not do anything for you. 

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