topic Renting to Adult Child - very informal in Investors & landlords

Renting to Adult Child - very informal

TaxQuestion105 — Mon, 09 Mar 2026 06:05:45 GMT

In 2020, we allowed our daughter to stay in our second home instead of formally renting it out, and she just reimbursed us for the utilities (we also could have asked that she put them in her name, but we were unsure how long the situation would last). Midway through 2021, we asked her to pay a little more. The FMV (no assessment - ballpark and hindsight) of the rent would be about $1,400/month; we asked her to pay $300/month above the reimbursed utilities . She in fact voluntarily paid $550 because ... she wanted to. So the total amount we "gifted" to her in 2021 was about $15,600, just above the annual $15,000 gift limit. We had and have no formal rental agreement.

We have no other deductions sufficient to Itemize, so will claim the Standard Deduction. We had no significant house expenses in 2021 on that house. Is it just as simple as:

We made $1,800 rental (other) income in 2021 so pay the income taxes on it.

Re: Renting to Adult Child - very informal

ColeenD3 — Tue, 15 Feb 2022 20:43:39 GMT

Yes. You would just claim the income. You have a not-for-profit rental.

Not Rented for Profit

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.

Where to report.

Report your not-for-profit rental income on Schedule 1 (Form 1040), line 8. If you itemize your deductions, include your mortgage interest and mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses from your not-for-profit rental activity when figuring the amount you can deduct on Schedule A.

In addition, since you were over the $15,000 limit for the gift, you will need to file a Form 709 to report it.

Re: Renting to Adult Child - very informal

TaxQuestion105 — Tue, 15 Feb 2022 21:07:25 GMT

Thank you.

I forgot to take into account that I am MF Jointly, so the total gift exclusion would be $30,000, so that is not an issue.