2007-11-12 09:09:23 · 3 answers · asked by John S 2 in Business & Finance ➔ Taxes ➔ United States
To get a tax break on a rental property you MUST charge a market based rent. Since you are letting your mother live there rent-free you may not deduct the normal expenses that you could otherwise if you charged market rent.
Anticipating your next question, no you cannot charge her market rent and gift it back to her. The IRS would see through that ploy and would disallow it for the straw transaction that it is.
What you CAN do if you are taking out a mortgage to pay for the home is to deduct the mortgage interest payments as an itemized deduction. You can deduct the property taxes as well. You are allowed to deduct the mortgage interest on a primary and second home as well as all property taxes on property not held for business purposes so by considering this a second home this will work for you.
2007-11-12 09:45:48 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
1. Possibly, if the home and whatever else you provide constitutes over half of her support, you MAY (or may not) be qualified to claim her as a dependent.
2. You can deduct the interest on the mortgage, if you own the home, owe the interest, and pay the interest.
3. You can deduct the real estate taxes, if you own the home and pay the real estate taxes.
2007-11-12 17:59:47 · answer #2 · answered by StephenWeinstein 7 · 0⤊ 0⤋
You can deduct the property taxes on your Schedule A as well as any mortgage interest on two homes.
So, assuming that you already own only one home you should be able to deduct the mortgage interest and property taxes as normal.
Items such as repairs, maintenance and insurance remain non-deductible.
2007-11-12 17:36:44 · answer #3 · answered by Wayne Z 7 · 1⤊ 0⤋