My parents live in a house that I own and make the payments on the mortgage, including escrow. Is the payment they make considered rental income to me?
2007-01-19 01:56:37 · 4 answers · asked by heather5683 1 in Business & Finance ➔ Taxes ➔ United States
Unfortunately it is rental income and you would have to offset it with expenses for interest, taxes etc.
Because it is rented to a related party you can offset the income with expenses but the tax code prohibits deducting losses on transactions between related parties.
You would be better off if they gifted you money. They could gift you up to $24,000 per year, it would not be income to you and you could then deduct the mortgage interest and real estate taxes on return as a second residence. Doing the transaction in this manner would not cost your parents any more in cash and it would end up saving you more taxes than renting to them does.
2007-01-19 04:10:23 · answer #1 · answered by waggy_33 6 · 1⤊ 0⤋
Technically yes. If you want to treat your house as rental, deduct expenses and depreciate, you could report the income. If you don't want to do that, I wouldn't worry. I don't think you will get a letter from IRS.
2007-01-19 02:05:27 · answer #2 · answered by spot 5 · 0⤊ 0⤋
Technically yes. But in the case of relatives, most people consider the home a second one of their own and do not claim it as income.
2007-01-19 02:01:26 · answer #3 · answered by strawberrycrush 4 · 1⤊ 0⤋
if you pick it up as income, i would also deduct the mortgage interest as an expense. if your parents are claiming the mortgage interest as a deduction on their tax return, then dont do anything.
2007-01-19 02:04:22 · answer #4 · answered by tma 6 · 0⤊ 0⤋