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Posted by Benjamin Yazersky CPA on April 16, 2008, 3:45 pm
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> removeps-groups@yahoo.com wrote:
>>
>>>> You may have a not-for-profit rental activity, and you are making a
>>>> gift
>>>> of the rent to your mother.
>>
>> If you have a not-for-profit rental, then expenses are limited to the
>> amount of income, right? And what about depreciation? Seems you have
>> to take depreciation, but then can't deduct it because your rental
>> income is zero.
>
> Well, the imputed rent would not be zero. There would be rent, and then a
> gift of the rent.
>
>> Anyway, is there a requirement that the home has to be treated as a
>> rental? Couldn't it just be an investment home owned by the brother
>> and sister, in which case depreciation and the complications of
>> Schedule E don't arise.
>
> I thought about that after I posted. Without taking the time to research
> the pubs for things I read once and only half-remembered, I think you are
> right. Better yet, it could just be a second home that a close relative
> is living in (might not apply if it was a non-related person).
>
> In fact, if the parent has little income and more than half the support
> (including free rent) is provided by either or both children, there might
> be a dependency exemption and even head of household -- sorry for the
> sloppy reply, it is April 14th after all. That is the power of "may" and
> "might"! ;-)
>
>> You may need to file a partnership return 1065 to split the property
>> tax between you and your brother.
>
> Now, that one I'm pretty sure is not the case, no matter what. Expense
> and income splitting on a passive activity rental property is allowed on
> Schedule E.
>
> -Mark Bole
>
> --
I have a different perspective here.
If you are renting below fmv, or allowing a relative to live rent free, it
would simply be treated as a personal residence.
So, if you only have one other personal residence you could then deduct the
mortgage int & property taxes.
--
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<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
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