03-24-2005, 03:29 AM
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 Re: Fair Market Value Rent to Relative wallace_cpa[at]msn.com wrote: - quote - > Okay, I've read some of the threads on this topic and there
Personal use it certainly is.> are so many positions, it's hard to separate them all. I've > got someone renting a second home to their son at below > market value. This is the son's primary residence. Here > are my conclusions: > 1) Vacation property rules indicate this situation requires > that the use is deemed personal use and no rental income or > expenses can be claimed on Sch E. - quote - > 2) Nothing precludes the owner from claiming the interest
Except for the fact that house (not a home) is NOT> and taxes on Schedule A. taxpayer's residence, either primary or secondary. Taxes yes, (provided they pay same); mortgage interest, no. - quote - > And,
Don't see it that way. Sounds like they and son are merely> 3) The rent that is received must be claimed as other > income. sharing expenses. Just don't structure it as rental property. - quote - > Some of the threads I read (one from an ex IRS agent) says
And therefore, since it's not rental property, no> this should be netted out on Sch E, but brought down to zero > with no loss allowed following the "Not for profit" rental > rules. Where should this be claimed then? > What about depreciation. If this property is later sold, > even thought no business deductions are allowed, is the > basis of the property reduced for allowed or allowable > depreciation. I would have to say no, but just thought I'd > check. depreciation implications. I've seen some cases from both CPA's and a certain nationally known tax prep firm which were "agressive". In one, clients were renting neighboring house to his mother who paid 100$ per month "rent", while taking interest deductions for $6000 plus depreciation, etc etc, for a net rental loss of about 7600$. You didn't say how old son is, but.. perhaps... is he still a dependent in college? (grin ChEAr$, Harlan Lunsford, EA n LA << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
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#-1
03-21-2005, 07:18 AM
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| Fair Market Value Rent to Relative Okay, I've read some of the threads on this topic and there are so many positions, it's hard to separate them all. I've got someone renting a second home to their son at below market value. This is the son's primary residence. Here are my conclusions: 1) Vacation property rules indicate this situation requires that the use is deemed personal use and no rental income or expenses can be claimed on Sch E. 2) Nothing precludes the owner from claiming the interest and taxes on Schedule A. And, 3) The rent that is received must be claimed as other income. Some of the threads I read (one from an ex IRS agent) says this should be netted out on Sch E, but brought down to zero with no loss allowed following the "Not for profit" rental rules. Where should this be claimed then? What about depreciation. If this property is later sold, even thought no business deductions are allowed, is the basis of the property reduced for allowed or allowable depreciation. I would have to say no, but just thought I'd check. << -------------------------------------------------> << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org > << -------------------------------------------------> |
| Tags |
| fair, market, relative, rent |
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