Rental Properties - Can I Rent to a Family Member?
Will my expenses then be deductible?
Who this applies to
Clients often buy a residence for a child in college or starting a first job, or for an aging parent. This applies to anyone hoping to take tax deductions for renting to a family member.
Can I deduct expenses if do?
If the owner rents the property to a family member, the IRS has specific rules on how this can be treated as a normal rental property with all its allowable expenses deductible.
However, if these rules are not followed, the rental days count as 'personal use days' for purposes of determining if the rental is a 'vacation residence' where expenses are limited.
What is the family member rental rule?
To avoid the rental from being treated as a 'personal use day' the rental must
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Be rented at a fair rental price, and
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The family member uses the property as their principal residence.
How to establish fair rental price?
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x
What is a primary residence?
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x
Who is a family member?
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your spouse,
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your brothers and sisters, including half-siblings,
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your ancestors, such as parents and grandparents, and
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your lineal descendants, such as children and grandchildren