Rental Expenses related to rental income paid by my elderly mother who lives with me.

[almasson]

My 98 year old mother has been living with me in the home I purchased in 1989. She had been contributing towards expenses until December 2024 when she became disabled. She was admitted to the hospital and then transferred to a rehabilitation facility until March of 2025, In January 2025, I consulted with an elder care attorney who recommended that we have her designate me as her POA, to which she agreed. He also suggested that I create a rental agreement whereby she pays me rent in order to a) memorialize what she had been contributing to the household (Taxes, insurance, repairs, heat, water, sewage, security, food etc.) b) work at spending down here assets to qualify for Medicaid, but she was denied due to her assets are in excess of the maximum allowable in the state.

The house has 8 rooms (4 bedrooms on the second floor) and 4 rooms on the first floor (living room, dining room, family room and kitchen with a half bath). Total square footage is 2035, with 1334 on the first floor and 701 on the second floor.

She pays 1,300/month of her Social Security and her Medicare Supplemental. She has one of the 4 bedrooms, but since she returned home in May, she has been spending all her time on the first floor in the family room where she sits/sleeps in a recliner because she cannot climb the stairs to the bedroom floor. She can get to the the other rooms but rarely does.

I provide her with food, drink and and medication as well as anything else she needs. There is no other caregiver but me. 

I don't know how to allocate the expenses against the income I receive from her and need some guidance.

Please provide some assistance.

[Vanessa A]

Is she paying you the Fair Market Value of rent in your area?  If not, then this would be considered personal use and although the income would be reported if you are considering it rent, the expenses would not be deductible.  You would report this as "Other income"  on Schedule 1 instead of schedule E. 

If she is paying the Fair Market Value for rent?  If so, then the income and expenses would be reported on Schedule E. If she gets 1 bedroom and full use of the house, then you can use the bedroom method and say she is 25% of the expenses, or you can count the number of people in the home and allocate that way.  Another method is the square footage method.  The method that you use simply needs to be reasonable. You would not be able to allocate 90% of the home expenses to her when she has 1 bedroom. 

Where do I enter income and expenses from a rental property?

If on the other hand, this is simply her paying her share of the expenses, then this is considered shared expenses and it is not taxable income to you. 

Also, since you are providing caregiving services to her, if part of the $1,300 is for caregiving, then this could be considered self-employment income which would need to be claimed on Schedule C. 

Do be aware, that if she is paying you to live there and providing over half of her own support, you would not be able to claim her as a dependent on your return. 

[almasson]

None of the $1300 is for care giving.

I don't know whether the amount is Fair Market Value or not, but I have been advised to use Schedule E and deduct related expenses so that I minimize the income but not create a loss. I am not aggressive when it comes to tax issues, so I just want to claim what is reasonable not to draw attention to the return.

I'm keeping the temperature in the house higher than I would otherwise do because she feels cold, so my heating oil bill is higher than normal and I think that part of the rental amount would be for keeping the house comfortable for her. Do I include heating fuel, water, phone, cable, tv etc under utilities? What else can be included in utilities?

[RobertB4444]

If you are entering this as a rental on schedule E then you think of it as a business.  Figure out what percentage of the home she is renting.  That's the first step.  @VanessaA gave you several options but let's do the easiest for this example and take is as a percentage.

You are renting 25% of the house to your mother.  The income is $1300 a month.  The expenses are 25% of all of the utility bills you have paid on the house for the year, 25% of the property taxes and 25% of the mortgage interest.  If you have anything else that you spent money on at the house for the year you can take 25% of it or you can take 100% of it if it was done directly for your mother in order for her to live there.

When you enter this into TurboTax you can enter the percentage of the house that you are renting and then just the total for each of those bills and TurboTax will figure the percentages for you.