Rental Income from a family member?

kjschubert
kjschubert Member Posts: 2 Newcomer
edited October 4 in Income

Our adult child is on SSI. We created a rental agreement with her this year. She has always lived with us. Do we have to file a Schedule E or is this other income? Thank you.

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  • MatthewD
    MatthewD FreeTaxUSA Team Posts: 258
    Answer ✓

    Hi,

    That can be a little tricky to answer, since I don't have all the details. Let me explain.

    When you rent to a relative and the rent is below the fair rental value, then it is considered personal use and you do not use a Schedule E Rental Income to report the income or expenses. What you do is report the rental receipts as Other Income and any expenses like property taxes and mortgage interest as an Itemized Deduction. When you enter the Other Misc Income, enter a description of something like, "Rent Receipts from Family Member".

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  • kjschubert
    kjschubert Member Posts: 2 Newcomer

    I calculated the rent based on a percentage of our mortgage payment, which includes property taxes and insurance, but is still below the rents in our area. Thank you for the answer.

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