Days of Personal Use vs Days Rented to Others

mistyrain

Hello!

I rented out a room in my home to a family member at a below market rate while living in the home all year. I would like to add this rental income to my taxes. I am filling out Schedule E for this and have questions about the Days of Personal Use vs Days Rented to Others. The tenant and my wife and I lived in the home together for the entire year.

When I enter 365 for 'Days of Personal Use' and 0 for 'Days Rented to Others' since the rate is below FMV I get an error from FreeTaxUSA. Any tips? What's the correct way to do this?

Thank you!

kiarab

Hello,

The IRS says that one of the ways a home is being used for personal use is:

1. A member of your family or a member of the family of any other person who owns an interest in it, unless the family member uses the dwelling unit as their main home and pays a fair rental price. Family includes only your spouse, siblings, half siblings, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.)."

(See "What is a day of personal use?": https://www.irs.gov/publications/p527 )

Since it would be considered personal use, this means that the rental income and expenses aren't reported on your return. If you are paying mortgage interest and real estate tax, you would be able to claim those as part of your personal Itemized Deductions. But any other expenses that you have for the rental property would not be allowed.