2007-02-24 07:19:52 · 6 answers · asked by D D 1 in Business & Finance ➔ Renting & Real Estate
Be careful what others are telling you. Seems to be a lot of people taking a moral view on a business matter.
In any case. IRS does recognize a situation where a family member rents a property at "below market rates" Unfortunately this is not good for you. An estimate needs to be made as to the fair market rent for the property. Whether you collect it or not. This "phantom" number is used as income on a schedule E and then is offset by expenses. Interest, taxes, depreciation, etc.
2007-02-24 09:38:39 · answer #1 · answered by loandude 4 · 1⤊ 0⤋
Is the brother disabled, or otherwise handi-capped? If so then she is doing the right thing. Does he have a large family, and is working, and struggling to make ends meet? There are alot of situations in which this would be acceptable. If things are beyond his control, to where he cannot pay rent, then let him stay there, if you have a house as a tax write off, then obviously you are not hurting financially. If it would be in any way dangerous for him to be on his own then let him stay. If on the other hand he is of a sound mind, physically able to work, and has no other pressing issues that keeps him from it, other than being lazy, and not wanting to work, then by all means make him pay rent. What ever the situation merits, use some common sense, think with your heart, and not your wallet. Dee
2007-02-24 07:30:46 · answer #2 · answered by Dee N 1 · 0⤊ 0⤋
The tax laws specifically adress rentals to relatives at 'below' market and disallow 'losses.' Free is below market no matter how you slice it. Not only that but rental expenses on a schedule D without income would draw an audit sure as hell...
2007-02-24 07:36:01 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Lol, Quix is right.
But here are the links on what you can deduct.
IRS: Residential Real Estate Rental deductions: http://www.irs.gov/publications/p527/index.html
IRS: 3.6 Itemized Deductions/Standard Deductions: 6. Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses): http://www.irs.gov/faqs/faq3-6.html
IRS publication on Home interest deduction: http://www.irs.gov/publications/p936/ar02.html#d0e1835 and or: http://www.irs.gov/faqs/faq3-6.html
Buena Suerte
2007-02-24 07:34:59 · answer #4 · answered by newmexicorealestateforms 6 · 0⤊ 0⤋
No.
I could work overtime, since I didn't, can I count it as a loss on my taxes? No, for the same reason.
2007-02-24 07:27:06 · answer #5 · answered by Quixotic 3 · 0⤊ 0⤋
why not collect a small amount of rent from the brother and do not declare the income...that is the American way.
2007-02-24 07:49:36 · answer #6 · answered by charlotte q 2 · 0⤊ 0⤋