Where do I report income from rental property that is rented at below fair market value to a family member

[johnm61]

Can I still deduct the mortgage interest and real estate taxes paid

[MinhT · Accepted solution]

If you rent your property below fair market value, the IRS considers that you do not rent your property to make a profit. In this case, 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.

Mortgage interest and property taxes paid are claimed in Schedule A as for your residence.

Please refer to this IRS document , especially the section on Not Renting for Profit on page 16 on how to report income and expenses:

https://www.irs.gov/pub/irs-pdf/p527.pdf

[KathyP247]

My daughter rents a condo from us and will pay below FMRV for 2 years because she's getting back on her feet.  The condo is paid off so we have minimal expenses to claim.  I read about Form 5213-Election To Postpone Determination as To Whether the Presumption Applies that an Activity Is Engaged in for Profit that I have to file within 3 years of rental start.  Is this a good way to go for now?  We will have losses for 2 years and then hopefully profit after that.