1. Home
  2. Taxes General Forum
  3. Residential rental tax question

Residential rental tax question

Hello, Here is question on residential rental property that the IRS publications don't seem to address. We have own a rental property for the past five years. We had tenants for all that time, collected rent, and handled it as a rental property on our federal return. However, for 2007, one of our daughters and her husband have lived in it for the entire year. We have not charged them rent. Over the long term, we still consider this property a rental. My daughter may live it in one more year, but after that we may rent it again (or possibly sell it). So, for 2007, can we treat this property as a rental? If so, can we deduct all the usual rental expenses -- maintenance, repairs, etc. -- or only the depreciation? Thanks for your advice on this!

Reply to
davidegriffin
Loading thread data ...

I am unable to back this up, my google powers failing me. I understand that there is an imputed rent, similar to if you tried to lend money to a child interest-free. There is a market rent you must take as income, and if you are gifting the value back to them, it's a gift subject to the gift limits ($12K/person). So if it's you and your wife, and daughter and son in law, there's $48K total you may gift. But the rent must be claimed as income. I may be mistaken, but this would stand to a reasonable conclusion as "there ain't no such thing as a free lunch".

Joe (hopeful someone will cite a reg or pub to contradict or corroborate)

Reply to
joetaxpayer

What you consider it in the long run is irrelevant. In 2007 it wasn't a rental because it wasn't available for rental.

No, and you can't deduct any rental expenses. You can deduct the real estate tax on Schedule A and, if you don't own more than two homes, mortgage interest on it as a second home.

If you place it back in rental service you pick up where you left off on depreciation. See Publications 527 and 936.

Reply to
Phil Marti

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.