topic Re: Claiming Rental Income in Investors & landlords

Claiming Rental Income

Anna0214 — Mon, 18 Nov 2024 00:38:26 GMT

Ok so I have a little bit of a unique situation and I don’t know how to claim it on my taxes.
I rent a home in central Texas. Several years ago, I bought a home in South Texas. At the time I was working half the month down south and I lived in the home while working. A friend was “renting” the other half of the property (term used loosely as she never actually paid me rent for 3 years and I had to replace her with a friend that would).
I am now full time back in central Texas but my part of the house still remains mine for when I need to go down to work or anything else. My friend rents the same half the house as always but essentially has the whole home to herself (except the master suite). She pays well below market price for the rental- it’s less than the amount I pay for the mortgage and utilities.
is this considered sharing expenses? A gift? Rental income?
I’m making no profit off the rental. It is just keeping the house available for my use and building up any equity until a better time to sell at this point.
I just don’t know how to claim the extra income. In the past I claimed it as rental income and deducted off expenses like utilities and maintenance. But now I’m thinking that was wrong.

Re: Claiming Rental Income

Carl — Tue, 19 Nov 2024 01:33:38 GMT

Since you refer to them as "my friend" this sounds more like a cost sharing arrangement to me. But are there more details I'm not aware of? For example, do you have a written, legally binding rental agreement? I'm also assuming you are the owner of the property you lease out, and that you're not sub-leasing or anything like that.

Re: Claiming Rental Income

Anna0214 — Tue, 19 Nov 2024 01:39:41 GMT

No, we do not have a written agreement. I own the house (I guess technically the bank owns the house but I pay a mortgage).

So if it is cost sharing, how does that get claimed on my taxes.

Re: Claiming Rental Income

VolvoGirl — Tue, 19 Nov 2024 01:47:32 GMT

You don’t claim it on your tax return. It’s just between you and your friend. You can deduct all the Mortgage Interest and property taxes, etc. on Schedule A if you itemize deductions instead of taking the Standard Deduction.

Re: Claiming Rental Income

Carl — Tue, 19 Nov 2024 01:49:30 GMT

If it's just a cost sharing setup, then you have nothing to report on your taxes. You're not making a profit, and you're doing this (I think) without any intent to make a profit.

Re: Claiming Rental Income

Anna0214 — Tue, 19 Nov 2024 01:55:38 GMT

No. If I was trying to make a profit, I would say I am doing a terrible job.