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Rental Property and fair market rent

I own a duplex and rent the other side out to my parents. When my mom retired, I lowered the rent to $150.00 a month. Since I have a HUD lien on the house the maximum rent i would charge a stranger is $350.00. So it is fair to say it is under fair market value. This is what the IRS says: Fair rental price. A fair rental price for your property generally is the amount of rent that a person who is not related to you would be willing to pay. Are they saying family members are different than general public and I can deduct expenes even though it is below fair market rent? How do I treat this on my return? What do I declare and what can I deduct, i.e. taxes, interest. etc. I was deducting half of those expenses prior to this year. Any clarification on this would be appreciated.

Thanks!

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Reply to
darcijj
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Renting to a Related Party at less than Fair Market rental value means you cannot deduct more than your income. In such a case your income goes on Form 1040 Line 21 and your expenses, not exceeding income, goes on Schedule A Line

22, subject to reduction by 2% of AGI.
Reply to
Arthur Kamlet

You should look into the vacation home rules. Depending on your facts and circumstances, it could be considered a 2nd personal residence. ___________________________________

-----> real address on hobokeni or hobokenx

Reply to
Benjamin Yazersky CPA

This merely defines how FRV (fair rental value) is determined.

No, only that IF you rent it for less than FRV, then your deductions are limited.

looks like you can deduct the real estate taxes at least.

ChEAr$, Harlan Lunsford, EA n LA

Reply to
Harlan Lunsford

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