Question

Renting a house to our son

Forum|Forum|2 years ago
February 29, 2024
1 reply
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We purchased a home to rent to our son at less than FMV, as his primary residence. The IRS considers this personal use. I know that income is suppose to be reported on Schedule 1 and the property tax and mortgage interest, up to the rent received, is to be reported on Schedule A. We do not itemize deductions. Where do I instead report the mortgage interest and property taxes, or do I lose those deductions because I am taking the standard deduction?

T

ThomasM125

You can only deduct the mortgage interest and property taxes as itemized deductions when you aren't renting the property to make a profit. Since you aren't itemizing, you are not allowed to deduct the expenses. Here is an excerpt that addresses this issue from IRS Publication 527: IRS Publication 527

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J

JanK12Author

Thank you. In 2024 we will have a small profit, with limiting deductions to interest and taxes. Will it then still be treated as not for profit, since it will be rented to our son at less than FMV?

J

JanK12Author

You can adjust the amount of Mortgage Interest you enter in TurboTax and/or eliminate the real estate tax entry to be equivalent to amount of rent received. Just keep documentation to show why you made the adjustments if needed.

@JanK12

Thank you. That was my first thought as far as how to handle it, but suspected that it would trigger contact from the IRS, which I would prefer not to have to deal with. If that is all that can be done, then I will just have to deal with it if they contact me.